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by David on March 1, 2020

Wells Fargo Fined By SEC

Wells Fargo, an American multinational financial services provider has received a fine of $35 million by the Securities and Exchange Commission for engaging in risky and improper investment advice.

According to the SEC, Wells cargo had been recommending risky investments to some of its clients, which include senior citizens and pensioners. They are recommending the purchases of single inversed ETFs and encouraging investors to hold on to them for months or even years.

ETFs are infamous for causing large and unexpected losses to traders if held on for longer than a day. Something that was noted by Wells Fargo’s internal guidance.

One of the biggest concerns was the fact that according to SEC’s findings, Wells Fargo does not protect or detect improper recommendations of single-inverse ETFs.

Antonia Chion, Associate Director of the SEC Enforcement Division commented on the matter, saying that firms must ensure that the securities they recommend are suitable for their clients, by maintaining effective compliance and supervisory programs. Some of Wells Fargo’s employees recommended complex instruments to retail investors who did not understand the risks involved, which resulted in Wells Fargo’s failure to meet these important obligations.

According to SEC, Wells Fargo has been fined for an amount of $35 million and it will be distributed among the harmed investors.

But this penalty comes only after a $3 billion settlement with the Justice Department and the SEC. Wells Fargo has been abusing their clients by misleading investors and opening accounts without their consent.

By David

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