Wells Fargo Advisors, the brokerage unit of Wells Fargo, has agreed to pay a fine of $4m to the US Securities and Exchange Commission (SEC) to resolve allegations of misconduct tied to sales of market-linked investments (MLIs) to retail investors between 2009 and 2013.
The settlement also includes reimbursement of $930,377 of ill-gotten gains and interest payment of $178,064.
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The regulator alleged that the firm generated large fees by persuading clients to trade their MLIs before maturity, in turn decreasing the investment returns of customers.
The watchdog also said that the firm’s representatives did not investigate the costs of the recommendations and approved these transactions despite internal policies forbidding short term trading.
SEC chief of the complex financial instruments unit of the enforcement division Daniel Michael said: “The products sold by Wells Fargo came with high fees and commissions, which Wells Fargo should have taken into account before advising retail customers to sell their investments and reinvest the proceeds in similar products.”
Wells Fargo agreed to the settlement without admitting or denying the charges. However, it has taken remedial measures, SEC said.
