Subscribe to our mailing list

* indicates required







We seek to provide information, insights and direction that may enable the Financial Community to effectively and efficiently operate in a regulatory risk-free environment by curating content from all over the web.


Stay Informed with the latest fanancialish news.




Regulatory Sanctions

Massachusetts's Securities Regulator Investigates Wells Fargo Advisors

March 9, 2018

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.