Chadrick David Kelly, a former broker employed at St. Louis, Missouri-based Wells Fargo Advisors, LLC, submitted a Letter of Acceptance, Waiver and Consent in which he consented to, but did not admit to or deny, the described sanction and the entry of the Financial Industry Regulatory Authority's (FINRA) findings that he engaged in unsuitable excessive trading and churning in his customers' accounts. The findings stated that as a result of Mr. Kelly's conduct, he willfully violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, FINRA Rule 2010, and NASD Rule 2110. Mr. Kelly, of Denham Springs, Louisiana, was barred from association with any FINRA member in any capacity. According to FINRA, Mr. Kelly's customers were unsophisticated investors with no education beyond the high school level, and each had annual income levels of less than $100,000 and a total net worth of under $500,000. Most of the customers lost a significant percentage of their retirement savings. Mr. Kelly generated more in commissions in two accounts than those accounts had in equity. The findings also stated that the customers relied entirely on Mr. Kelly's investment advice, and he exercised de facto control over their accounts. The level of activity in the accounts, as reflected in the accounts' turnover rates and cost-to-equity ratios, was inconsistent with the customers' objectives and financial situation. The findings also included that Mr. Kelly made unauthorized trades in other customers' accounts. Mr. Kelly entered sell orders in non-discretionary client accounts without obtaining client approval and effected numerous additional trades in customers' accounts without obtaining approval. Each of the customers expressed surprise when they learned about the trading in their accounts as none of the customers' accounts were discretionary accounts.
Broker-dealers must establish and implement a reasonable supervisory system to protect customers from broker misconduct. If broker-dealers do not establish and implement these protective measures, they may be liable to investors for damages flowing from the misconduct. Therefore, investors who have suffered damages due to churning and unauthorized trades by their broker can bring forth claims to recover losses against broker-dealers like Wells Fargo Advisors, LLC, which should consistently oversee its brokers' activities in order to prevent the above described prohibited conduct.
Have you suffered losses in your Wells Fargo Advisors, LLC account due to churning and/or unauthorized trades by your broker? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against Wells Fargo Advisors, LLC stockbrokers who may have engaged in misconduct and caused investment losses.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 33 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at email@example.com for answers to any of your questions about this blog post and/or any related matter.