Tag Archives: Wells Fargo

Seijas of Wells Fargo Crypto Ponzi

James Seijas, a former Wells Fargo broker who was alleged to be part of part of a crypto Ponzi scheme has now been barred by the Financial Industry Regulatory Authority from associating with any FINRA member firms.  If you have suffered such losses, please call 303-300-5022 for a free and confidential consultation.

Wells FargoThe former Wells Fargo broker signed a FINRA letter of acceptance, waiver and consent on Oct. 22 in which he consented to the imposition of a bar against him by the industry self-regulating group. FINRA signed the letter on Tuesday and posted the letter on its website.

On March 24, 2020, Wells Fargo filed an amendment to Seijas’ regulatory form disclosing the details of his termination, “disclosing for the first time that Seijas had been named as a defendant in a lawsuit alleging that he had ‘misrepresented investments as part of a Ponzi scheme’.

FINRA, the regulator overseeing securities brokerages, investigated and brought suit, but Seija failed to defend the charges against him.  On Sept. 29, 2021, in connection with its investigation concerning the termination description filed by Wells Fargo, FINRA sent a request to Seijas for on-the-record testimony, according to FINRA.  Seijas acknowledged that he received FINRA’s request for documents as part of the investigation and would not appear or cooperate at any time.

Wells Fargo Losses

If you suffered losses with Wells Fargo in unsuitable inverse ETFs, ETP investments or other investments that you understood to have only low to moderate risk, please call 1-866-817-0201 for a free and confidential consultation with an attorney.

Wells Fargo has agreed to pay $35 million to settle Securities and Exchange Commission charges that brokers at Wells Fargo Advisors and its Financial Network (FiNet) channel were allowed to unsuitably sell single-inverse exchange traded funds (ETFs).

Inverse ETFs use a variety of derivatives to allow a fund holder to profit from the decline of a market or index.

Wells paid $2.7 million in fines and restitution in 2012 for failing  to supervise sales of non-traditional ETFs, and agreed to fix its policies and procedures, but “significant shortcomings remained,” the SEC order said. 

FINRA, the regulator overseeing securities brokers, expelled Leonard Charles “Lenny” Kinsman in May 2020.  Kinsman was a broker for Wells Fargo in Staten Island, NY and failed to attend a regulatory hearing, thus failing to contest charges against him.  The charges stem from Kinsman misrepresenting the risk of investments and recommending investments that were unsuitable.  Prior to the regulatory action, his employers had paid approximately $1.3 million to settle investor claims of unsuitability and misrepresentation.

Wells FargoWells Fargo has previous issues with FINRA and suitability.  FINRA previously ordered Wells Fargo on Monday to pay investors $3.4 million after its advisers recommended “unsuitable” investments known as volatility-linked products that were “highly likely to lose value over time.”

Wells Fargo pushed its investors into these investments, volatility-linked ETPs, as hedges, to protect against a market downturn. In fact, these investments are unsuitable for such a strategy.  The investment are, in reality, “short-term trading products that degrade significantly over time,” regulators said, and “should not be used as part of a long-term buy-and-hold” strategy.  The recommendation of such unsuitable investments is a form of negligence, and could be seen as reckless enough to be considered fraud.

Volatility-linked ETPs are complex products that most investors do not understand and, as such, they rely upon their adviser, who should be a trained professional, to understand.   Certain Wells Fargo representatives mistakenly believed that the products could be used as a long-term hedge on their customers’ equity positions to help safeguard against a downturn in the market. In fact, volatility-linked ETPs are generally short-term trading products that degrade significantly over time and should not be used as part of a long-term buy-and-hold investment strategy.

FINRA issued Regulatory Notice 17-32 shortly after announcing the settlement with Wells Fargo to remind firms of their sales practice obligations relating to these products. Wells Fargo had previously been on notice to provide heightened supervision of complex products such as ETPs in Regulatory Notice 12-03, and were advised, along with all other brokerages, to assess the reasonableness of their own practices and supervision of these products.

FINRA found, “Wells Fargo failed to implement a reasonable system to supervise solicited sales of these products during the relevant time period.”  The complete news release of the FINRA action can be found at the following link.

Losses with Maczko of Wells Fargo

If you invested with Matthew Maczko, a broker with Wells Fargo Advisors in Oak Brook, Illinois and suffered losses that you question, please call 1-866-817-0201 for a free and private consultation with an attorney concerning your rights.

Wells FargoMaczko was suspended from the securities industry last week, the week of February 7, 2017, for alleged excessive trading in the brokerage accounts of a 93-year-old customer, according to a FINRA. Maczko effectively controlled the customer’s accounts, which had an average aggregate value of $3 million.

Maczko’s trading  generated more than 2800 transactions resulting in $582,000 in commissions, $84,270 in fees and approximately $397,000 in trading losses for the account in question. Such trading activity was not only churning but was also unsuitable for Maczko’s victim given the customer’s age, risk tolerance and income needs.

Maczko also intentionally mislead FINRA regulators and investigators by telling them during testimony that he had not spoken to  other senior customers after his termination from Wells Fargo, when in fact he had spoken with them several times.

Securities brokers are required to follow the rules of FINRA.  FINRA requires that investments not only be suitable in terms of the nature of the investment, but also that the investments be quantitatively suitable.  This means that the number of trades cannot be excessive in light of the wants and needs of the customer.  Above a certain level, the trades can be seen as not being for the benefit of the customer, but for the broker.

The trades of Maczko went well beyond the acceptable number of trades.