Wells Fargo allegedly failed to properly supervise advisors who were selling single-inverse ETFs to retail investors.
The Sonn Law Group is investigating allegations that Wells Fargo failed to properly supervise its registered representatives with regard to sales of ETFs. If you or a family member has suffered losses investing, we want to discuss your case. Please contact us today for a free review of your case.
The SEC announced on February 27, 2020, that they reached a settlement for $35 million with Wells Fargo Clearing Services and Wells Fargo Advisors Financial Network involving the sales of certain ETFs. According to the SEC, Wells Fargo’s wirehouse division and FiNet independent advisor network failed to properly supervise representatives who sold single-inverse ETFs to retail investors.
“Wells Fargo Advisors settled claims with the U.S. Securities and Exchange Commission related to our policies and procedures and supervision of single-inverse ETFs. Wells Fargo Advisors no longer sells these products in the full-service brokerage,” a Wells Fargo spokeswoman wrote in an e-mail response to questions about the settlement.
The SEC stated that Wells Fargo lacked adequate compliance policies and procedures with respect to the suitability of the ETFs that were recommended. Wells Fargo’s policies, that were in place from April 2012 through September 2019, were “not reasonably designed to prevent and detect unsuitable recommendations of single-inverse ETFs,” according to the SEC statement.
In addition, Wells Fargo failed to adequately train advisors about the ETFs they were selling. Some reps did not understand the risk of losses associated with ETFs when held long-term. When ETFs are held longer than one day, particularly in a volatile market, investors are at risk of suffering large and unexpected losses, the SEC pointed out. Some Wells Fargo clients held the ETFs for months or years.
The $35M fine will be distributed to harmed investors, which includes senior citizens and retirees. The SEC order also censures Wells Fargo and requires Wells Fargo to cease and desist from committing or causing any future violations.
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The Sonn Law Group is currently investigating allegations Wells Fargo representatives improperly recommended ETFs. We represent investors in claims against negligent brokers and brokerage firms. If you or your loved one experienced investment losses, we are here to help. For a free consultation, please call us now at 866-827-3202 or complete our contact form.