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SEC Fines Wells Fargo & Co (NYSE:WFC) $35 million To Settle Probe On Improperly Recommended ETFs

The US Securities and Exchange Commission has ordered Wells Fargo & Co (NYSE:WFC) to pay a $35 million fine in a settlement regarding allegations that inappropriately recommended the risky investment to retirees and senior citizens.

Wells Fargo fined for selling inappropriate investments to retirees

According to the SEC, the Wells Fargo Advisors Financial Network and Wells Fargo Clearing Services failed to supervise investment advisers that recommended high-risk ETFs sufficiently. The SEC filing indicates that the company’s advisers recommended conservative and moderate risk investments to clients, including retirees and senior citizens. Some of the dubbed clients had little or no investment experience.

The penalty comes days after the company agreed to a $3 billion settlement with the Department of Justice and the regulator regarding criminal charges of the company’s fake accounts scandal. The company has not admitted or denied wrongdoing regarding its role in the deception of clients.

The SEC indicated that the $35 million will go to the people who received the investment advice and suffered losses. A Company spokeswoman indicated that the company will not be selling “single-inverse ETFs” anymore in the “full-service brokerage.” However, clients who still want to purchase the ETFs can do so from other providers.

Wells Fargo warned in 2009 about the single inverse ETFs

The Financial Industry Regulatory Authority sanctioned Wells Fargo in 2009 for its sales of practices involving the ETFs. However, the company continued with the conduct until last year. The SEC indicated that the company’s single-inverse ETFs policies and procedures were not designed reasonably to detect or prevent improper recommendation of the complex products.

The sanctions come following a notice from the regulator to the company regarding the sales practices of the risky ETFs. In 2009 FINRA indicated that single inverse ETFs were not appropriate for retail customers planning top hold them for over a single trading session.

SEC enforcement division’s associate director Antonia Chion stated that companies should maintain compliance and supervisory roles on the products they offer customers to ensure that they are suitable.

Published by Brendan Byrne

While studying economics, Brendan found himself comfortably falling down the rabbit hole of restaurant work, ultimately opening a consulting business and working as a private wine buyer. On a whim, he moved to China, and in his first week following a triumphant pub quiz victory, he found himself bleeding on the floor based on his arrogance. The same man who put him there offered him a job lecturing for the University of Wales in various sister universities throughout the Middle Kingdom. While primarily lecturing in descriptive and comparative statistics, Brendan simultaneously earned an Msc in Banking and International Finance from the University of Wales-Bangor. He's presently doing something he hates, respecting French people. Well, two, his wife and her mother in the lovely town of Antigua, Guatemala. You may contact Brendan via his email ([email protected]) or his Google+ page (https://plus.google.com/u/0/116608759701551457422).

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