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Stories of Interest
- Sarah ten Siethoff is New Associate Director of SEC Investment Management Rulemaking Office
- Catherine Keating Appointed CEO of BNY Mellon Wealth Management
- Credit Suisse to Pay $47Mn to Resolve DOJ Asia Probe
- SEC Chair Clayton Goes 'Hat in Hand' Before Congress on 2019 Budget Request
- SEC's Opening Remarks to the Elder Justice Coordinating Council
- Massachusetts Jury Convicts CA Attorney of Securities Fraud
- Deutsche Bank Says 3 Senior Investment Bankers to Leave Firm
- World’s Biggest Hedge Fund Reportedly ‘Bearish On Financial Assets’
- SEC Fines Constant Contact, Popular Email Marketer, for Overstating Subscriber Numbers
- SocGen Agrees to Pay $1.3 Billion to End Libya, Libor Probes
- Cryptocurrency Exchange Bitfinex Briefly Halts Trading After Cyber Attack
- SEC Names Valerie Szczepanik Senior Advisor for Digital Assets and Innovation
- SEC Modernizes Delivery of Fund Reports, Seeks Public Feedback on Improving Fund Disclosure
- NYSE Says SEC Plan to Limit Exchange Rebates Would Hurt Investors
- Deutsche Bank faces another challenge with Fed stress test
- Former JPMorgan Broker Files racial discrimination suit against company
- $3.3Mn Winning Bid for Lunch with Warren Buffett
- Julie Erhardt is SEC's New Acting Chief Risk Officer
- Chyhe Becker is SEC's New Acting Chief Economist, Acting Director of Economic and Risk Analysis Division
- Getting a Handle on Virtual Currencies - FINRA
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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.