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- Wells Fargo Has Shown Us Its Contemptible Values
- UBS to Counter Trading Troubles With M&A Work
- SEC Moves Quickly To Shut Down Fake Pre-IPO Share Scam
- SEC Testimony: Oversight of the SEC Division of Enforcement
- FINRA Modifies 'Agency Debt Security' in Rule 6710
- Is Jamie Dimon Doing a U-Turn on Bitcoin?
- After New Yorker's Racist Rant Goes Viral, His Law Firm Gets Pummeled with 1-Star Yelp Reviews
- Bill O’Donnell is New CFO at MetLife
- Trump Still Owes Deutsche Bank, Others as Much as $480Mn
- Wells Fargo Scandals Hurt Its Retirement Business
- Michigan State to Pay $500Mn to Victims of Larry Nassar's Abuse
- Top Lawyer at Novartis Leaving Over $1.2Mn Contract with Michael Cohen's Consulting Firm
- Cadwalader Adds Mark Chorazak to its Financial Regulation Practice
- Deutsche Bank: It's A Short According to Eisman of ‘The Big Short’ Fame
- Up In Smoke: Bank of Montreal Goes All-In on Pot Deals
- RBS to Pay $4.9Bn to Settle Toxic MBS Probe with U.S.
- Apple and Goldman Sachs Team Up to Release New Credit Card
- Robinhood, A Stock, Trading App Rejected by 75 Investors, Now Worth $5.6Bn
- Wells Fargo Reportedly Pocketed Fire And Police Department Pension Fund Fee Rebates
- Trading App Robinhood Surpasses E*Trade In User Numbers
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NEWSLETTERS & ALERTS
Massachusetts's Securities Regulator Investigates Wells Fargo Advisors
One week after the U.S. Justice Department ordered Wells Fargo to conduct an internal investigation of its wealth and investment management business after whistleblowers flagged "sales problems" in the unit, Massachusetts Secretary of the Commonwealth William Galvin announced that the state regulator would investigate that same brokerage division for possible customer abuses by employees.
Wells Fargo’s internal review will focus on whether employees at Wells Fargo Advisors recommended unsuitable investments or made inappropriate referrals or recommendations related to advisory accounts or 401(k) roll-overs. For good measure, Galvin has asked for information about the scope of that investigation.
William Galvin appears to be taking the lead on enforcement of the DOL fiduciary rule. As recently as February 15, Galvin’s office charged discount broker Scottrade – now owned by TD Ameritrade - with dishonest and unethical activity and a failure to supervise. Scottrade is accused of practicing aggressive and improper sales practices, while “knowingly” violating established rules by linking sales contest of retirement accounts.
Investment News points out in its article, how broker-dealers can get into the crosshairs of the DOL fiduciary rule [See "Wells Fargo Advisors Now Under Investigation by Massachusetts Regulator"]:
A common response to the DOL rule by brokerages has been to move clients from commission-based accounts to fee-based accounts, as brokers try to avoid variable pay that would require use of a best-interest contract that exposes them to class-action lawsuits.
But the DOL rule's impartial conduct standards, which are in effect, also could be violated by transferring a buy-and-hold client from a brokerage account to an advisory account, according to Joshua Lichtenstein, a partner at Ropes & Gray.
"Even though we're in this transition period, if you are moving investors into a fee-based account, you have to make sure it's appropriate for an investor, as opposed to a commission-based account," Mr. Lichtenstein said.