Chicago-based Stoltmann Law Offices is representing investors who’ve suffered losses from dealing with broker-advisors who’ve hidden their outside financial activities. Sometimes, brokers have “side deals” while working at an advisory firm, which they may pitch to existing clients. In a heavily regulated industry, they have to tell their employers and these so-called “outside business activities”, including outside brokerage accounts. When they fail to disclose their other businesses, they can be fired.
FINRA, the federal securities regulator, fined and suspended an ex-Wells Fargo broker “who was terminated by the wirehouse for failing to close three outside brokerage accounts despite being told to do so numerous times by the firm,” according to ThinkAdvisor.com. Without admitting or denying FINRA’s findings, Jacob Popek signed a FINRA Letter of Acceptance, Waiver and Consent on Aug. 31 “in which he consented to the imposition of a $2,500 fine and a three-month suspension from associating with any FINRA member in all capacities.” Wells Fargo declined to comment.
Between November 2018 and April 2020, FINRA stated, “while associated with Wells Fargo, Popek maintained outside brokerage accounts without the firm’s written consent. In October 2018, Popek informed the firm that he maintained three outside brokerage accounts at two other member firms.” Wells Fargo said it “directed Popek to close those accounts. But despite receiving that instruction and multiple subsequent instructions from the firm to close the accounts in 2019, he maintained each of these accounts until July 2019, December 2019, and April 2020, respectively,” according to FINRA.
Popek “effected multiple trades in one of those outside accounts in 2019 and 2020,” FINRA alleged. Also, from November 2018 until his termination, without the firm’s consent, he “maintained two additional outside brokerage accounts that he failed to disclose to the firm,” according to FINRA. In December 2019, FINRA stated that “Popek went on to falsely attest on a Wells Fargo compliance questionnaire that he had no outside brokerage accounts, although he continued to maintain three of his outside accounts at that time.”
Wells Fargo has an extensive record of running afoul of regulators and hurting clients. In 2016, the bank was hit with $185 million in fines from the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency and the City and County of Los Angeles for the creation of 1.5 million fake deposit accounts and more than 500,000 fake credit cards using customer names without their permission. In the aftermath of this scandal, according to Yahoo Finance, then-CEO John Stumpf was fired and had $41 million in compensation clawed back. Later that month, Wells Fargo said it would “stop unreasonable sales goals.”
Have you invested with brokers who sold you money-losing or overpriced investments or traded without your permission? Finra and the SEC have strict rules on disclosing risk profiles on all investments sold by brokers and investment advisers. If they fail to fully inform you of downside risk or vet shady companies offering investments, you may have a case in arbitration.
Firms are also legally required by Finra to monitor and supervise what their brokers are selling – their investments must be vetted and authorized by the firms – and have an obligation to investors to fully reveal true risk and return information about the vehicles sold. Broker-dealers and advisors are required to fully vet all of the investments they are selling to determine if they are suitable for your age and risk tolerance. Investors can file FINRA arbitration complaints if these rules are broken.
If you invested with a broker-advisor and lost money as a result, you may have a claim to pursue through FINRA Arbitration. Please contact Stoltmann Law Offices, P.C. at 312-332-4200 for a free, no obligation consultation with a securities attorney. Stoltmann Law Offices is a contingency fee law firm which means we do not get paid until you do!
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