Investigation into Charles Frieda

Sonn Law Group is investigating claims related to Charles Frieda (CRD #5502319).  Frieda currently is associated with Wells Fargo Advisors, LLC (“Wells Fargo”) in Irvine, California and has been with Wells Fargo since October 2012. Prior to joining Wells Fargo, Frieda was associated with Morgan Stanley from June 2009 through October 2012.

Pending Customer Complaints Cite Energy Related Losses

Frieda currently has 8 pending customer complaints with the Financial Industry Regulatory Authority (FINRA), including:

• June 2016 – A claim for unspecified damages in which the customer alleges she instructed the broker to invest for long term and low to medium risk, but was invested in risk investments in oil-related companies and has lost 70% in the last two years.
• June 2016 – A claim for $35,000 in damages in which the customer alleges the broker was instructed to invest funds conservatively but the funds were invested aggressively and negligently.
• May 2016 – A claim for $216,000 in damages in which the customer alleges that he wished to invest conservatively, and carefully but his funds were invested all in energy stocks.
• April 2016 – A claim for unspecified damages in which the customers allege that between 2012 and 2016 the brokers over-concentrated their portfolio in unsuitable energy investments.
• April 2016 – A claim for unspecified damages in which the customers allege that in or about 2013 their portfolio was over-concentrated in unsuitable oil and gas investments.
• April 2016 – A claim for unspecified damages in which the customer alleges that she wanted low risk stocks, and although she was assured that her investments in energy securities were not risky, she lost substantial assets.
• April 2016 – A claim for unspecified damages in which the customer says she emphasized she was not a risk taker, and although she was assured that her investments in energy securities were not risky, she lost substantial assets.
• November 2015 – A claim for unspecified damages in which the client complains that exposure tospeculative energy investments grew to 70% after portfolio moved to firm, and should have been reduced when the market value of the securities declined.

Closed Customer Complaints

In addition to Freida’s 8 pending customer complaints, Frieda has 18 resolved and 2 closed-denied/withdrawn customer complaints, including:

1. A written complaint alleging damages of $200,000 based on allegations of unsuitability and over-concentration in energy and commodities stock received by FINRA on March 7, 2016 and settled on March 31, 2016 for $109,000;
2. An oral complaint alleging damages of $53,654 based on allegations of unsuitable investments received by FINRA on December 9, 2015 and settled for $16,000 on February 29, 2016;
3. An oral complaint alleging damages of $19,787.83 based on allegations of misleading, negligence and misrepresentation received by FINRA on October 19, 2015 and settled on February 16, 2016 for $19,787.83;
4. An oral complaint alleging damages of $45,608 based on allegations of unsuitable investments received by FINRA on December 9, 2015 and settled for $16,000 on February 19, 2016;
5. An oral complaint alleging damages of $250,000 arbitration claim based on allegations of misleading, negligence and misrepresentation received by FINRA on October 9, 2015 and settled on February 16, 2016 for $180,212.20;
6. A $192,884 arbitration claim based on allegations of unsuitability and overconcentration received by FINRA on February 12, 2016 and settled for $105,000 on April 21, 2016;
7. A written complaint alleging damages of $200,000 based on allegations of unsuitable investment recommendations received by FINRA in January 15, 2016 and settled for $50,000 on May 3, 2016;
8. A $279,425 arbitration claim based on allegations of unsuitable investment recommendations  received by FINRA on November 13, 2015 and settled for $163,750 on February 29, 2016;
9. A written complaint with unspecified damages due to losses in “energy heavy” stocks received by FINRA on November 2, 2015 and settled for $75,000 on February 25, 2016;
10. A written complaint alleging damages of $122,000 based on allegations of unsuitable investments in small cap energy stocks received by FINRA on October 22, 2015 and settled for $90,000 on March 23, 2016;
11. A written complaint with unspecified damages due to Frieda’s recommendation that the investor continue to hold their energy stocks through a yearlong decline received by FINRA on August 26, 2015 and settled for $95,000 on March 31, 2016;
12. A written complaint alleging damages of $1,200,000 based on allegations that the energy stocks Frieda placed them in were too risky for their investment objectives resulting in no income and a loss in principal received by FINRA on August 20, 2015 and settled for $490,000 on March 31, 2016;
13. A written complaint alleging damages of $500,000 based on claims of unsuitable concentration in energy investments and failure to follow agreement to rebalance received by FINRA on January 29, 2015 and settled for $87,800 on February 21, 2016;
14. A written complaint alleging damages of $336,000 based on allegations of unsuitable concentration insmall cap energy investments received by FINRA on January 29, 2016 and settled for $195,000 on February 26, 2016;
15. A written complaint alleging damages of $250,000 based on allegations of inappropriate, unbalanced investments that did not match investor’s risk tolerance received by FINRA on October 6, 2014 and settled for $334,000 on June 12, 2015;
16. A written complaint with unspecified damages based on unsuitable investments received by FINRA on December 19, 2012 and settled for $14,800.83 on December 24, 2012;
17. A written complaint with alleged damages estimated to be over $9,000 based on aggressive investments received by FINRA on January 14, 2016 and denied on May 12, 2016; and
18. A written complaint with unspecified losses based on unsuitable investments in energy and small cap stocks received by FINRA on October 1, 2015 and withdrawn on October 23, 2015.

What Do Freida’s Twenty Four Customer Complaints Mean?

Brokers who have disclosures for misconduct are five times more likely to end up with future, similar marks on their records. Disclosures can include anything from bankruptcies, personal tax liens, and customer disputes with brokers. The study defined misconduct as regulatory actions, a job change following an allegation, customer disputes with awards, completed civil actions, and settled customer complaints. The study included settled customer complaints in the definition of misconduct observing that the likelihood of future disclosures still increased five-fold where a broker’s complaint was dismissed or dropped.

Just over 7% of brokers have disclosures on their records. Considering most brokers have no disclosures on their records and there is a process to expunge, or erase, certain disclosures from their records, the 24 misconduct disclosures on Freida’s record is an exceptionally high number.

Suitability and Supervision

The Financial Industry Regulatory Authority (“FINRA”) requires that brokerage firms have a reasonable basis to believe that a transaction is the right fit for their customers based on their awareness and understanding of the customers investment profile. The brokerage firm must consider a customer’s age, other investments, investment objectives, investment experience, risk tolerance, investment time horizon, liquidity needs, and so on. A broker can be held liable for making unsuitable investment recommendations. Recommendations must be suitable. Member brokerage firms are also barred from presenting misleading information to get you to buy or sell an investment.

FINRA member firms are responsible for the supervision of a broker’s activities while the broker is registered with their firm. Therefore, Wells Fargo may be liable for investment or other losses suffered by Freida’s customers.

If you were a client of Wells Fargo Advisors, LLC, Morgan Stanley, or Charles Henry Frieda and have experienced investment losses or irregularities in your investment accounts, please call Sonn Law Group at 844-689-5754 or click here to access our contact form. Sonn Law Group is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies.