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FINRA Fines Wells Fargo for Sales to the Elderly
Posted by: Robert Rex
December 27, 2011

Earlier this month, the Financial Industry Regulatory Authority (FINRA) announced today that it fined Wells Fargo Investments,  $2 million for unsuitable sales of unsuitable investments to elderly clients. These investments, reverse convertible securities, were deemed inappropriate for these customers.   In addition, Wells Fargo is required to pay restitution to customers who did not receive certain sales discounts.

FINRA also filed a complaint against the Wells Fargo broker who sold the investments, Alfred Chi Chen. Chen sold the unsuitable reverse convertibles, and also made unauthorized trades in several customer accounts, including accounts of deceased customers.

 FINRA found that Wells Fargo failed to review reverse convertible transactions to ensure they were suitable and also did not provide sales charge discounts to eligible customers purchasing unit investment trusts, both serious failings that harmed investors.  

FINRA also found that Wells Fargo  had insufficient systems and procedures in place to monitor the sales being made to elderly customers.  Between January 2006 and July 2008, Wells Fargo failed to provide certain eligible customers with these "breakpoint" and rollover and exchange discounts.    

DID YOU KNOW YOU CAN CHECK OUT YOUR BROKER'S DISCIPLINARY RECORD?              Investors can obtain information about, and the disciplinary record of, any FINRA-registered broker or brokerage firm by using FINRA's BrokerCheck. BrokerCheck IS available at no charge. Investors can access BrokerCheck online at www.finra.org/brokercheck. Alternatively, call our office and ask for Nan Thompson at 561 391 1900 and we will be happy to obtain the publicily available information on your broker for no charge.

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