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Former Wells Fargo Broker Named in FINRA Complaint Alleging Unsuitable Private Securities Recommendations

Dennis Mark Adam Merritt, a registered representative  formerly employed with the Palm Harbor, Florida branch of Wells Fargo Advisors, LLC was named a respondent in a Financial Industry Regulatory Authority (FINRA) complaint alleging that he failed to perform adequate due diligence in connection with unsuitable private securities recommendations he made to several of his customers.

The complaint alleges that Dennis Merritt, of Palm Harbor, Florida, recommended that four of his customers invest in a speculative investment, namely, a company called SavvyPhone, LLC, without having conducted proper due diligence to have made such recommendations. According to FINRA’s complaint, Mr. Merritt participated in three private securities transactions in which his customers invested a total of $115,000 in SavvyPhone based upon his unsuitable recommendations.

FINRA’s complaint alleges that Mr. Merritt participated in the sale of Class A Units of SavvyPhone and that he failed to review the Operating Agreement, the financial projections, the SavvyPhone product or investigate the company’s executives.  Furthermore, the complaint alleges that Mr. Merritt never requested or reviewed other important documents which were referenced in the company’s Investment Summary, such as the business plan, product specifics, industry research and marketing and sales strategies.  FINRA notes in its complaint that Mr. Merritt recommended these investments to his customers in hopes of securing future business from SavvyPhone.  Particularly, the complaint alleges that he wanted the company to select him as the broker for its 401(k) plan.

Mr. Merritt’s private securities transactions were a violation of his member firm’s policies, which prohibited registered representatives from engaging in such transactions.  Further, Mr. Merritt allegedly violated NASD Rule 2310 and FINRA Rule 2010 for his unsuitable recommendations.

Stockbrokers, registered representatives, and other financial industry personnel have been known to engage in many types of misconduct which may violate industry rules, practices, and procedures.  In order to protect customers from broker misconduct, FINRA rules require broker-dealers to establish and implement a reasonable supervisory system.  The implementation of these rules requires supervisors to monitor employees to ensure they comply with federal and state securities laws, securities industry rules and regulations, as well as the brokerage firm’s own policies and procedures.  If broker-dealers and their supervisors do not establish and implement such protective measures, they may be liable to investors for damages flowing from the misconduct.  As a result, investors who have suffered losses stemming from a registered representative’s failure to conduct due diligence, unsuitable recommendations and/or other types of misconduct can bring forth claims to recover damages against broker-dealers like Wells Fargo Advisors, which have a duty to oversee its employees in order to prevent these types of stockbroker misconduct.

Have you suffered losses in your Wells Fargo account due to your stockbroker’s unsuitable recommendation?  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 and others stockbrokers for unsuitable recommendations, failure to do due diligence, and/or other misconduct.

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 35 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 post a comment, call (800) 732-2889, send Mr. Pearce an email at pearce@rwpearce.com, and/or visit our website at www.secatty.com for answers to any of your questions about this blog post and/or any related matter.