New York, NY – December 16, 2016 — The Securities Arbitration Law Firm of Klayman & Toskes, P.A. (“K&T”), www.nasd-law.com, has launched an investigation into Wells Fargo Advisors, a wholly-owned brokerage dealer of Wells Fargo (NYSE:WFC), for Financial Industry Regulatory Authority (FINRA) sales practice violations for failing to supervise client presentation reports, including those generated by the firm’s Envision investment analysis tool.
On December 5, FINRA accepted from Wells Fargo Advisors an Acceptance Waiver and Consent for $1 million in fines for “failing to establish a supervisory system reasonably designed to achieve compliance with applicable securities laws and regulations regarding the use and dissemination to customers of the [Wells Fargo Advisors’ client presentation report] Application”, which included assets “held away from the firms.” According to FINRA, Wells Fargo Advisors’ “representatives were permitted to manually enter information regarding customers’ external accounts, assets and liabilities” into a centralized database maintained by the brokerage firm. During the period from June 2009 and June 2015, more than 5 million reports were generated from the firm’s most popular client report system.
According to K&T, “Wells Fargo Advisors’ representatives who utilized Envision Presentation reports, in order to dispense financial advice may have violated FINRA sales practice rules and regulations.” K&T is investigating potential sales practice violations from Wells Fargo Advisors’ use of the Envision Presentation report program, in conjunction with unsuitable investment strategies and recommendations. Customers may have retired too early and/or taken undue risks with retirement plan proceeds as a result of unrealistic assumptions. Wells Fargo Advisors may have failed to supervise the financial planning advice provided to its customers, while at the same time creating incentive programs for its advisors that encouraged behavior that was contrary to their customers’ best interest.