FINRA Bars Ex-Wells Fargo Rep Over Private Securities Transactions

Starting in early 2019 and continuing until he was terminated from Wells Fargo in April 2020, Reed “solicited at least six individuals, including at least two Wells Fargo customers, to invest in securities issued by” a Pasadena, California-based software and web development company, FINRA alleged.

The securities were notes issued by the company, which was not named in the AWC letter, to raise capital for its ongoing operations and for investors to profit from the repayments, which included a 15% rate of interest, according to FINRA.

Reed participated in at least $3.5 million of those investments away from Wells Fargo by “providing written materials about the company to investors, and by communicating with them orally, by email and text message about the company and encouraging them to invest,” FINRA alleged.

Reed also “facilitated the transactions by, among other things, helping investors send or receive transfers of funds,” according to the AWC letter. “In one case, Reed offered to personally guarantee half of an individual’s investment” and received “selling compensation of $191,340 from the company for his role in soliciting and facilitating the investments,” FINRA alleged.

He also “personally invested over $200,000 in the company,” according to FINRA, which added that Reed failed to provide Wells Fargo with prior notice or obtain its advance approval for his participation in the private securities transactions.

By participating in private securities transactions away from Wells Fargo, Reed violated FINRA Rules 3280 (governing private securities transactions) and 2010 (governing standards of commercial honor and principles of trade), FINRA said.

(Pictured: FINRA building in New York. Photo: Ron Pechtimladjian/ALM)