by Howard Haykin

A research analyst with Wells Fargo Securities agreed to pay a $20K fine and serve a 2-year suspension to settle FINRA charges that he published multiple research reports on a company while engaged in undisclosed employment discussions with that company

FINRA FINDINGS.    During his time with Wells Fargo, the individual covered approximately 25 companies, including several retail furnishing companies - including Company X.

In August 2015, Company X personnel informed the analyst that they were interested in hiring someone with a background like his. The analyst expressed interest in the job for himself and, over the span of 7 months, he exchanged emails with Company X personnel and had numerous meetings with senior management of Company X. In early February 2016, the analyst received a written employment offer - although one month later he was told that his start date would be delayed a few months. In March, the employment offer was rescinded.

     What Went Wrong.    Throughout the "courting period," Wells Fargo published 5 research reports authored by this analyst. However, from early August to late March, ... 

• The analyst never disclosed to Wells Fargo that he had conducted employment discussions with, and had accepted, an employment offer from the company (according to FINRA, the reason was, in part, to preserve his annual bonus from Wells Fargo - which he received in mid-March). 

• The analyst never disclosed his material conflicts of interest in any of the research reports he authored.

• The analyst never disclosed that he had a financial interest in the company’s securities, which arose when he accepted an employment offer from the company that included issuance of restricted shares of company stock.

This case was reported in FINRA Disciplinary Actions for November 2017.

For details on this case, go to ...  FINRA Disciplinary Actions Online, and refer to Case # #2016051925301.