According to the Financial Industry Regulatory Authority (FINRA), Randall Layne Girton, of Orland Park Illinois, recommended that one of his Well Fargo customers purchase mutual fund shares and then, shortly thereafter, sold them to reinvest in a Wells Fargo investment advisory program, known as “Fund Source.” FINRA investigated and concluded that Mr. Girton’s recommendation that the customer sell her mutual fund share to invest in a Wells Fargo Proprietary Investment Advisory Program was an unsuitable investment recommendation, especially when he recommended several months after that the customer sell the Fund Source program and repurchase the mutual funds.
FINRA Rule 2111(a) requires that registered representatives have a reasonable basis to believe that the recommended securities transactions are suitable in light of a particular customer’s investment objectives and financial condition. FINRA found that Mr. Girton’s recommendation that the Wells Fargo customer liquidate the Class A mutual fund shares that were part of a long term buy and hold investment strategy within months was unsuitable. According to FINRA, Mr. Girton had no basis to believe that the expected return on the Fund Source program would exceed the return on the mutual fund investment he previously recommended.
Further, FINRA found that Mr. Girton again recommended, several months later, that the Wells Fargo customer move her investments out of the Fund Source program, and then reinvest them back into Class A mutual fund shares. FINRA apparently believed the movement of the Wells Fargo customer’s assets in and out of investments added fees and charges which were allegedly for Mr. Girton’s benefit and not his customer’s.
Randall Girton submitted an Acceptance Waiver and Consent (AWC) agreement, without admitting or denying the allegations, in which he was fined $12,500 and ordered to disgorge commissions he received in the amount of $5,165. Mr. Girton’s unsuitable investment recommendations also resulted in a suspension from being associated with any FINRA member for a period of 3 months.
Stockbrokers have been known to engage in many types of practices in violation of industry and firm rules, practices, and procedures including the recommendation of unsuitable investments and unsuitable investment strategies. In order to protect customers from stockbroker misconduct, FINRA rules require that broker-dealers establish and implement a reasonable supervisory system. The implementation of the rules require supervisors to monitor employees to ensure they comply with federal and state securities laws, securities industry rules and regulations, and the brokerage firm’s own policies and procedures. If broker dealers like Wells Fargo and their supervisors do not establish and implement these protective measures, they may be a liable to investors for damages flowing from the misconduct. As a result, investors who have suffered losses because of their stockbroker’s unsuitable investment recommendations can file a claim to recover damages against broker dealers like Wells Fargo, which should consistently oversee its employees in order to prevent stockbroker misconduct.
Have you suffered losses in your Wells Fargo investment account due to your stockbroker’s recommendation which wasn’t in line with your investment objectives? 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 stockbrokers for unsuitable recommendations, misrepresentations, and/or other unauthorized and illegal conduct.
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 post a comment, call (800) 732-2889, send Mr. Pearce an email at email@example.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.