The broker-dealers of Wells Fargo and Company (NYSE: WFC) and the Securities and Exchange Commission (SEC) reached an agreement to settle the charges involving its investment recommendation practice.
On Thursday, the Wells Fargo Clearing Services and Wells Fargo Advisors Financial Network agreed to pay $35 million to resolve the Commission’s allegations. The money will be distributed to investors harmed by the broker-dealers.
Additionally, both broker-dealers agreed to cease and desist from committing or any future violations of federal securities laws.
SEC allegations against Well Fargo broker-dealers
The SEC filed a complaint alleging that Wells Fargo Clearing Services and Wells Fargo Advisors Financial Network failed to supervise its investment advisers and registered representatives who were recommending single-inverse ETFs to clients.
The federal securities regulator found that some Wells Fargo investment professionals did not fully understand the risk of losses associated with single-inverse ETFs when held over a long period.
