Attention FAE Customers:
Please be aware that NASBA credits are awarded based on whether the events are webcast or in-person, as well as on the number of CPE credits.
Please check the event registration page to see if NASBA credits are being awarded for the programs you select.

Yet Another Wells Fargo Scandal: Investors Steered to Actively Trade Investments Meant for Long-Term Holds

By:
Chris Gaetano
Published Date:
Jun 26, 2018
Wells Fargo

In the latest of a long list of Wells Fargo scandals, the bank was recently fined $4 million by the Securities and Exchange Commission over financial advisers encouraging people to actively trade investments that are meant to be held long-term, according to CNN Money. The market-linked investments acted in a similar way to bonds, meaning that ideally they should be held to maturity. However the SEC said that, for two years, financial advisers at the bank encouraged investors to sell them before that point, and to invest the proceeds into new ones, which generated substantial fees for the bank and reduced returns for the investors. This was despite already-existing internal policies that banned the flipping of products like this. The bank agreed to the settlement, but did not admit or deny the SEC's allegations. It said that the problems the SEC cited were addressed in a previous internal policy change, and added that the issue was linked to only two financial advisers in the bank. 

For those of you who need a quick recap, here are some of the other scandals Wells Fargo has been embroiled in over the past few years:

* Opening depository and charge accounts for millions of customers without their knowledge or consent and charging them associated fees in order to meet sales goals. 

* Retaliating against whistleblowers who reported this behavior. 

* Overcharging foreign exchange customers in order to fatten executive bonuses. 

* Overbilling small business customers for processing credit card transactions. 

* Signing up hundreds of thousands of customers for car insurance plans they didn't ask for, resulting in tens of thousands having their cars repossessed. 

* Signing up customers for Prudential insurance products without their knowledge or consent. 

* Making modification to loan terms without customers' knowledge or consent. 

* Violating ERISA for pushing clients to roll their 401(k) plans into more expensive IRAs that were bad for the customer but good for Wells Fargo.    

Click here to see more of the latest news from the NYSSCPA.