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March 08, 2018 at 02:16 PM
A Wells Fargo bank branch in New York. (Photo: Bloomberg)
Massachusetts securities regulators have opened an investigation of Wells Fargo Advisors to better understand the extent of problems revealed by the bank a week ago.
Specifically, they aim to better grasp the extent of inappropriate referrals of brokerage clients to managed and advisory accounts, unsuitable recommendations of alternative investments, as well as unsuitable referrals and recommendations tied to 401(k) rollovers.
“Wells Fargo’s recent banking scandal, which involved opening bogus accounts for their customers, leads me to believe that where there is smoke, there’s fire,” said Commonwealth Secretary William Galvin, the state’s top securities regulator, in a statement. “I need to be assured that Massachusetts residents haven’t been burned by corporate greed.”
Wells Fargo Advisors includes about 14,500 registered representatives.
Galvin’s office adds that it is seeking both more details on the scope of Wells Fargo’s own review of issues within the wealth unit and “reasonable assurances that any Massachusetts investors affected by unsuitable recommendations will be made whole.”
“I am aware that there has been a recent trend in the industry to push investors into wealth management accounts which may bring more revenues to the firm, but which are not suitable for all investors,” Galvin said. “Given the recent retirement savings crisis in America, referrals and recommendations involving 401(k) accounts should be closely scrutinized, in light of the Department of Labor’s fiduciary rule.”
Wells Fargo’s Review
