Wells Fargo Clearing Services Regulatory Overview

The White Law Group reviews the regulatory history of Wells Fargo Clearing Services, LLC.   

Wells Fargo Clearing Services LLC, (CRD#: 19616/SEC#: 801-37967,8-37180) based in St. Louis, Missouri, is a dual registered broker dealer. Wells Fargo Clearing Services, LLC also uses the trade name of Wells Fargo Advisors. According to its 2022 Focus Report, the company has $30 million in assets under management. According to its CRD, or FINRA BrokerCheck report, the Wells Fargo Clearing Services has 479 disclosure events including 301 arbitrations, 176 regulatory actions and 2 civil events. 

Broker-dealers may face various regulatory actions from FINRA and the Securities and Exchange Commission, including censures, fines, suspensions, and restitution. Such regulatory actions can have severe consequences, impacting the reputation and profile of the broker-dealer.   

This broker dealer review focuses on publicly available information concerning Wells Fargo Clearing Services, its securities sales practices, and its regulatory history with FINRA, which oversees brokers and brokerage firms.   To review Wells Fargo Clearing Services full CRD, you can visit FINRA BrokerCheck. 

Unsuitable Investments and Customer Losses 

September 12, 2024: Wells Fargo Clearing Services has reportedly been ordered to pay about $3 million to settle charges by FINRA for failing to supervise representatives who made unsuitable securities recommendations to retail customers. From January 2017 to December 2018, 40 representatives allegedly recommended short-term trading of long-term investment products like syndicate preferred stock, closed-end funds, and medium-term notes, leading to customer losses.

While Wells Fargo earned $1.8 million in concessions and commissions, the firm agreed to a $400,000 fine, $600,000 in restitution, and $2 million in disgorgement. This is part of a broader pattern, as Wells Fargo has faced $43 million in penalties since 2020 for supervisory failures.

FINRA Fines Wells Fargo for Early UIT Rollovers 

Wells Fargo to pay nearly $2.7 million for early UIT rollovers  December 2021 – FINRA censured and fined Wells Fargo Advisors Financial Network $100,000; and censured and fined Wells Fargo Clearing Services $550,000 plus $2.083 million in restitution. A Unit Investment Trust (UIT) is a form of investment company that offers investors shares, or “units,” in a fixed portfolio of securities in a one-time public offering that terminates on a specified maturity date.   

When a registered rep recommends that a customer sell his or her UIT position before the maturity date and then ‘roll over’ those funds into a new UIT, it causes the customer to incur greater sales charges than if the customer had held the UIT until maturity.   

FINRA Fines Wells Fargo for Inaccurate Valuations 

First Clearing LLC Censured and Fined $300,000  November 2020 – FINRA reportedly censured and fined broker-dealer First Clearing LLC (Wells Fargo Clearing Services) $300,000 in connection with alleged failure to provide accurate valuations on REITs & DPPs, as well as supervisory issues. 

This matter reportedly originated from a customer complaint made in August 2016 to FINRA’s Senior Help Line regarding inconsistent values reflected on her account statements concerning a REIT she had previously purchased. 

Failure to Supervise Variable Annuities Switches 

Wells Fargo to pay $1.4 M in Restitution September 2020– Wells Fargo Clearing Services and Wells Fargo Advisors Financial Network have agreed to pay more than $1.4 million in restitution, plus interest, to about 100 customers, as well as fines totaling $675,000, for failing to supervise recommendations that customers switch from variable annuities to other investments.  

FINRA said that Wells Fargo failed to obtain sufficient data from variable annuity issuers to review the suitability of variable annuity switches, including surrender fees, despite rules to the contrary. 

Wells Fargo hit with $35 Million 

Wells Fargo Fined by SEC over Inverse ETF Sales April 2020 – Wells Fargo has agreed to pay $35 million after the SEC charged it with failures involving its investment recommendation practices. 

The SEC charged Wells Fargo Clearing Services and Wells Fargo Advisors Financial Network with failure to supervise and train investment advisors and registered representatives recommending single-inverse ETF investments to retail investors.  The SEC noted that the bank lacked adequate compliance policies and procedures tied to the suitability of these recommendations. 

Compliance Violations

FINRA Fines Wells Fargo Clearing Services for Compliance Violations 

July 2017 – Wells Fargo Clearing Services agreed to a censure, fine of $20,000, and restitution to investors for allegedly fully and promptly executing 50 market orders in preferred securities, according to FINRA. FINRA noted that in 19 of those 50 transactions, the firm failed to use reasonable diligence to find the best interdealer market and failed to buy or sell at favorable prices. 

FINRA Arbitration 

In addition to regulatory actions, FINRA BrokerCheck may disclose arbitration awards related to customer disputes. These awards typically reveal the outcomes of arbitration proceedings, potentially resulting in financial compensation for affected customers. If a broker or firm has multiple arbitration awards against them, it may indicate a pattern of unresolved customer complaints or misconduct. 

The White Law Group Files a FINRA Claim against Wells Fargo Clearing Services 

Wells Fargo Clearing Services Lawsuit May 2023- The White Law Group filed a FINRA arbitration claim against Wells Fargo Clearing Services for investment losses involving high-risk equity stocks.  

The firm submitted a claim on behalf of a Florida resident alleging claims for violation of common law fraud, breach of fiduciary duty, negligence, and negligent supervision. The claim further alleged that Wells Fargo Clearing Services unsuitably invested its client in high-risk equity stocks. The claim was seeking damages of $1,000,000 to $2,000,000.00.    

Wells Fargo Clearing Services – Broker Misconduct and Customer Complaints        

There have been several cases of registered representatives employed by Wells Fargo Clearing Services who were allegedly involved in broker misconduct and fraudulent activities.  Broker dealers are required to supervise their employees. If they fail to do so they may be held liable through a FINRA arbitration claim.   

Wells Fargo Broker Pleads Guilty to Fraud 

February 2023 – Former Wells Fargo broker Mario E. Rivero Jr. reportedly pleaded guilty for allegedly stealing over $600,000 from his clients to fund his gambling and personal expenses. From April 2018 through November 2020, Rivero purportedly stole $626,478 from five clients, according to the charges. He allegedly lied to his clients, telling them that he would invest the funds, but instead, Rivero purportedly kept the money for himself. Rivero was registered with Wells Fargo Clearing Services from 12/02/2010 – 10/01/2020, in ELIZABETH, NJ.  Mario Rivero Jr. Reportedly Pleads Guilty to Fraud 

FINRA reportedly bars James Dunn Jr. after 22 Customer Complaints   

FINRA reportedly barred financial advisor James Dunn Jr. (CRD # 6084258) from the securities industry after he allegedly failed to provide information in its investigation. Dunn reportedly has 22 customer complaints filed against him from 2021-2022, according to his FINRA BrokerCheck Report. In March 2022, an investor alleged that Dunn “overconcentrated their accounts in Chinese educational stocks without their knowledge, consent or permission.” Several of the customer complaints allege that Dunn purchased securities in their accounts without authorization.   Wells Fargo reportedly discharged Dunn in 2019 for “concerns regarding mutual fund trades that were marked unsolicited at the time the trades were entered.” James Dunn Jr. Barred after Allegations of Misconduct 

Wells Fargo Advisor Kenneth Welsh Charged with Defrauding Investors 

October 2021 – The SEC charged Former Wells Fargo Advisors broker Kenneth A. Welsh (CRD #4657872) with purportedly stealing almost $3 million from customers to pay his credit card debts and purchase gold coins and luxury items.

Welsh, of Fairfield, NJ, purportedly stole $2.86 million through 137 transactions from January 2016 to January 2021. He allegedly transferred money from his customers to third parties and accounts held in his family’s names by altering pre-signed checks to hide his alleged activities from the firm’s compliance department. According to the SEC, the transactions were reportedly not authorized by any of his clients or customers, some of whom were “elderly and financially unsophisticated.” A parallel criminal complaint was filed from the U.S. Attorney’s Office for the District of New Jersey. Kenneth Welsh Charged with Stealing Millions from Customers   

Failure to Supervise – Wells Fargo Clearing Services

All broker-dealers have a responsibility to adequately supervise its employees. They must ensure the necessary procedures and systems to detect misconduct.  Brokerage firms that fail to monitor the business activities of their employees may be liable for investment losses due to negligent supervision for the misconduct of their employees.   

When brokers violate securities laws, such as making unsuitable investments, the brokerage firm they are working with may be liable for investment losses through FINRA Arbitration.   

If your broker has defrauded you, you may be able to file a FINRA claim against your brokerage firm. FINRA arbitration can be a complex and technical process, and having an experienced attorney who is knowledgeable about securities law can greatly increase your chances of success.                

Potential Lawsuits to Recover Investment Losses     

If you are concerned about investments you made with Wells Fargo Clearing Services, The White Law Group may be able to help.  To contact the firm, please call 888-637-5510          

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm dedicated to helping investors in claims in all 50 states against their financial professional or brokerage firm. Since the firm launched in 2010, it has handled over 700 FINRA arbitration cases.                

Our firm represents investors in all types of securities related claims, including claims involving stock fraud, broker misrepresentation, churning, unsuitable investments, selling away, and unauthorized trading, among many others.                 

With over 30 years of securities law experience, The White Law Group can help you recover your investment losses.                 

With offices in Seattle, Washington and Chicago, Illinois, the firm reviews securities fraud cases throughout the country.