The SEC Sanctions Wells Fargo for Alleged Supervisory Issues

According to reports, the Securities and Exchange Commission has recently announced that Wells Fargo has agreed to pay $35 million over shortcomings with its investment recommendation practices.

The regulator reportedly 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 also reportedly concluded in issuing the sanction that the bank lacked adequate compliance policies and procedures tied to the suitability of these recommendations.

Inverse exchange-traded funds use various derivatives to profit from a decline in the value of an underlying benchmark and/or to hedge a portfolio from a decline; they also are known as “short” or “bear” ETFs. Single-inverse ETFs, referred to as 1X (for “one times”) products, are 100% hedged vs. other products (2X and 3X), which are 200% and 300% hedged, respectively.  These investments are extremely risky and only suitable for very savvy, high-risk investors.

The foregoing information is being provided by The White Law Group.  The White Law Group represents investors throughout the country in FINRA arbitrations against brokerage firms like Wells Fargo.  For a free consultation with a securities attorney, please call The White Law Group at 888-637-5510.  For more information on the firm and its representation of investors visit https://www.whitesecuritieslaw.com.