Brokerage Firm Review: Wells Fargo Advisors

Wells Fargo Advisors Financial Network (“Wells Fargo Advisors”) (CRD# 11025) has many different complaints filed by FINRA (Financial Industry Regulatory Authority), state regulatory organizations, and investors such as yourself. At the Law Offices of Robert Wayne Pearce, we have investigated Wells Fargo Advisors, its regulatory and customer complaints, and have also represented investors with claims of fraud, negligence, and breach of fiduciary duty against this organization and its financial advisors.

If you believe you have a claim against Wells Fargo Advisors, you should strongly consider hiring an investment fraud lawyer. You should not wait until it’s too late to file a claim. The Law Offices of Robert Wayne Pearce, P.A., offers free consultations. Give us a call at 800-732-2889. Let’s discuss your case and see what we can do to help you get the compensation you need and deserve.

Can I Sue Wells Fargo Advisors?

If you’ve lost money caused by Wells Fargo Advisors and/or its employees’ misconduct then the answer is, YES, you can sue Wells Fargo Advisors but the odds are you signed away your right to sue in court and agreed to resolve your dispute in a FINRA arbitration proceeding. Attorney Robert Wayne Pearce has over 40 years of personal experience in FINRA arbitration proceedings and knows very well how you can not only sue Wells Fargo Advisors in FINRA arbitration proceedings, but WIN that arbitration. The easiest way to know if you have a viable case against Wells Fargo Advisors is to call Attorney Pearce at our office at 800-732-2889.

Investment Losses? We Can Help

Discuss your legal options with an attorney at The Law Offices of Robert Wayne Pearce, P.A.

Get A Free Consultation

or, give us a ring at (800) 732-2889.

What is Wells Fargo Advisors?

Wells Fargo Advisors (CRD# 11025) is a registered broker-dealer. It operates as a full-service independent broker-dealer, providing a range of financial products and services to individual investors and financial advisors.

As a registered broker-dealer, Wells Fargo Advisors is subject to regulations and oversight by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). It is required to comply with industry standards and regulations to ensure the protection of its clients’ interests.

A failure to comply with industry standards by either its brokers or the firm itself can result in disciplinary actions, fines, or other penalties imposed by regulatory authorities.

Wells Fargo Advisors Has Many Different Regulatory Problems 

Wells Fargo Advisors’ rapid growth has not been without consequences. There have been approximately 30 state and self-regulatory body disclosure events; that is, final and formal proceedings initiated by a regulatory authority (e.g., a state or federal securities agency like the U.S. Securities and Exchange Commission (SEC) or self-regulatory body like the Financial Industry Regulatory Authority (FINRA) for a violation(s) of investment-related rules or regulations. In addition, there have been hundreds of customer complaints filed against Wells Fargo Advisors for misconduct by its securities sales and investment advisory representatives that are not reported by the firm on its Central Depository Record. 

We have reported and written about these regulatory problems and customer complaints over many years. Wells Fargo Advisors is a repeat offender: there are over 30 FINRA-reported disciplinary proceedings citing the firm with one form of supervisory lapses or another.

A Brief Overview of Some of the Regulatory Problems Wells Fargo Advisors Has Faced Over the Years*

Wells Fargo Advisors has been repeatedly censured, warned, and fined multi-millions of dollars for its own misconduct and failure to supervise its army of financial advisors.* A few of the notable FINRA Sanctions for its Supervisory Failures are below:

$2 Billion Settlement in Fake Account Scandal

Brief overview: Wells Fargo faced allegations of misleading investors about its rampant sales practice complaints, resulting in a $2 billion settlement. The SEC charged former CEO and Chairman John Stumpf for providing misleading statements about Wells Fargo Community Bank’s “cross-sell” strategy, which involved selling unnecessary and unused financial products to existing customers. The SEC also initiated litigation against Carrie Tolstedt, the former head of Wells Fargo Community Bank, for misrepresenting the cross-selling strategy as a measure of financial success. Wells Fargo previously settled for $500 million in February 2020 and paid a total of $3 billion for misleading millions of customers over 15 years by opening fake accounts and engaging in fraudulent practices.

Broker Barred for Complaint Alleging Misappropriation of Client Funds

Brief overview: Former Wells Fargo broker Tyler Rigsbee was barred by FINRA for allegedly misappropriating client funds. An internal review by Wells Fargo found evidence that Rigsbee transferred client funds from Wells Fargo to a third-party broker-dealer and then to his personal bank account without permission. When FINRA requested documents and information regarding the matter, Rigsbee failed to comply, violating FINRA rules and resulting in his association ban. Details about the customers affected by the alleged misappropriation were not provided.

$1.4 Million Penalty for Unsuitable Variable Annuity Complaint

Brief overview: Wells Fargo faced regulatory action for its failure to supervise representatives who recommended unsuitable variable annuity switches to approximately 100 customers. Between 2011 and 2016, Wells Fargo representatives made at least 101 potentially unsuitable switches, resulting in customers paying surrender fees and substantial new sales charges. Despite requirements to conduct supervisory reviews and send switch letters to confirm customer understanding, Wells Fargo failed to meet these obligations. The unsuitable recommendations caused customers to incur unnecessary fees, resulting in a total of $1,445,167.50. FINRA ordered Wells Fargo to pay $1.4 million in restitution to affected customers and imposed $657,000 in fines for supervisory failures.

Unsuitable Investments

Brief overview: In October 2017, Wells Fargo Advisors faced allegations of recommending unsuitable investments to investors. Securities representatives at the firm were found to be pushing customers to purchase risky volatility-linked exchange traded funds (ETFs) without considering their individual profiles or risk tolerance. As a result, Wells Fargo Advisors was ordered to pay $3,411,478.78 in financial restitution to affected investors.

Failure to Adequately Maintain Customer Records

Brief overview: In December 2016, it was determined by FINRA that Wells Fargo Advisors had failed to maintain over 1.5 million critical customer documents in a non-erasable format, as required by securities industry rules. Due to the loss of these records, certain terms and conditions agreed upon by investors were no longer accessible. Wells Fargo Advisors agreed to pay a fine of $1,500,000 without admitting or denying any wrongdoing.

Failure to Obtain and Secure Relevant Customer Information

Brief overview: In December 2016, Wells Fargo Advisors was found to have failed in obtaining and recording certain investment holdings that some clients had outside of the firm. This lack of information made it difficult for brokers to recommend truly suitable investment opportunities. As a result, the brokerage firm was censured and fined $1,000,000 for this misconduct.

Broker Negligence: Misrepresentation and Omission of Material Facts

Brief overview: In August 2014, a FINRA arbitration panel awarded a Wells Fargo Advisors client $195,000 in financial compensation. The panel determined that a securities representative from Wells Fargo Advisors had misrepresented and omitted material facts regarding a municipal bond investment. The client suffered significant investment losses as a result of this misconduct.

Why Does Wells Fargo Advisors Have So Many Regulatory Problems And Customer Complaints?

Independent broker-dealers are notorious for their lax supervisory practices and procedures. The business model of these franchise type operations is to open many offices nationwide for steady growth of fixed monthly revenues without the costs attendant to a full-service branch office with on-site manager, compliance officer and operation personnel. The registered representatives of these independent broker-dealers generally operate as separately incorporated businesses. They are not employees of the broker-dealer and therefore not controlled in the same manner as full-service brokerage firm representatives. The registered representatives control their structure and costs to maximize profits and often leave the protection of investors’ rights and interests as their lowest priority.

The typical supervisory organization of independent broker-dealer operations is to have other independent contractors operate Offices of Supervisory Jurisdiction (OSJs) to monitor the registered representatives from geographically remote offices and then report to the main franchisor’s compliance office at national headquarters. The supervisors at the OSJs are not employees of the franchisor and often run their own brokerage, insurance and other businesses. They are not devoted full-time supervisors of the smaller branch offices. Consequently, OSJ managers cannot and do not supervise the day-to-day operations of the registered representatives of these Independent broker-dealers. 

Generally, there is no immediate review of new accounts opened, securities transactions, business records, cash or securities receipts and deliveries, correspondence and business activities unrelated to the securities brokerage operation at these independent brokerage firms. The lax supervision leaves investors who have transferred their accounts to the smaller independent broker-dealer vulnerable to sales of securities that have not been reviewed or authorized by anyone other than the sales representative earning a commission. There may be no one onsite to detect forgeries of clients’ signatures on documents, the placement of inaccurate information about a client’s investment objectives and financial condition to document the suitability of a particular investment recommendation. Oftentimes there is no daily review of sales literature and client correspondence to protect against misrepresentations and misleading statements being made to investors. In fact, it is not unusual for there to be only one compliance audit visit per year at many of these offices.

These Independent brokerage business operations are worrisome to the North American Securities Administrators Association (NASAA), which has documented more instances of sales abuse and consequently investor losses at these firms than the traditional brokerage firms with branch offices with on-site managers and compliance personnel.

Did Wells Fargo Advisors Advisor Misconduct Cause You Investment Losses?

When financial advisor misconduct has caused you to lose substantial value to your investment accounts, you have the right to seek reimbursement from the responsible parties. Wells Fargo Advisors is responsible like any employer for its financial advisors acts and omissions. In addition, it has an independent duty to supervise its stockbrokers and investment advisors. These cases can be extremely complex, and so having the support of a reputable attorney who is experienced in recovering investment losses for investors is key to your success. Many customers make the mistake of contacting Wells Fargo Advisors without representation with an attorney about their complaints and have their complaints denied.

Related Read: Can You Sue Your Brokerage Firm?

Investment Losses? We Can Help

Discuss your legal options with an attorney at The Law Offices of Robert Wayne Pearce, P.A.

Get A Free Consultation

or, give us a ring at (800) 732-2889.

Consult With An Attorney Who Recovers Investment Losses Caused By Wells Fargo Advisors Today!

The investment loss attorneys at The Law Offices of Robert Wayne Pearce, P.A., have helped countless investors over the last 40 years recover the losses from their investment accounts that were caused by broker negligence or misconduct. The firm has extensive experience with Wells Fargo Advisors cases, and Attorney Pearce is committed to seeing that those responsible for the losses you have suffered are held fully accountable.

Give us a call at 800-732-2889. Let’s discuss your case and see what we can do to help you get the compensation you need and deserve.

Robert Wayne Pearce

Robert Wayne Pearce of The Law Offices of Robert Wayne Pearce, P.A. has been a trial attorney for more than 40 years and has helped recover over $170 million dollars for his clients. During that time, he developed a well-respected and highly accomplished legal career representing investors and brokers in disputes with one another and the government and industry regulators. To speak with Attorney Pearce, call (800) 732-2889 or Contact Us online for a FREE INITIAL CONSULTATION with Attorney Pearce about your case.

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