FINRA Bars Wells Fargo Stockbroker For Suitability
Charles Bernard Lynch Jr. of Irvine, California, a stockbroker registered with Wells Fargo Advisors, LLC, has been barred from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity by consenting to findings that he made unsuitable investment recommendations to customers. Letter of Acceptance, Waiver and Consent, No. 2015045713301 (Dec. 11, 2017).
According to the AWC, from November of 2012 to October of 2015, a Wells Fargo stockbroker and Lynch made recommendations to approximately fifty customers in regard to an investment strategy, where those customers represented most of the stockbroker’s and Lynch’s customers. The AWC stated that customers’ accounts were over-concentrated in one sector of the equity market. In particular, four energy sector equities had been reportedly the focus of an investment strategy which exposed the firm’s customers to substantial investment losses. The AWC revealed that investments that Lynch recommended were considered unduly speculative and were concentrated in a volatile market.
The AWC stated that Lynch did not take into account that customer information was either not accurate or had not been provided to him by customers during the time that Lynch made the investment recommendations. Evidently, he was not in any position to determine whether his investment strategy was suitable for customers by failing to determine the customers’ needs for liquidity and income, investment horizon, net worth, tolerance for risk, and experience with investing. Some customers reportedly invested over fifty percent of their net worth in the securities concentrated in the energy sector.
The AWC further revealed that in 2015, during which time the markets experienced volatility, Lynch provided added assurance to customers about maintaining the course of the investment strategy he recommended, which ultimately led customers to collectively sustain several million dollars in investment losses. FINRA found Lynch’s conduct in that regard was violative of FINRA Rules 2010 and 2111.
FINRA Public Disclosure confirms that Lynch has been referenced in fifty-six customer initiated investment related disputes pertaining to accusations of his misconduct while employed with Wells Fargo and Morgan Stanley. For example, a customer initiated investment related arbitration claim involving Lynch’s conduct was settled for $120,000.00 in damages based upon allegations that Lynch effected unauthorized, unsuitable and excessive trades in the customer’s account. FINRA Arbitration No. 16-03404 (Mar. 17, 2017).
Subsequently, a customer initiated investment related arbitration claim regarding Lynch’s activities was resolved for $125,000.00 in damages supported by accusations that Lynch made misrepresentations to the customer. FINRA Arbitration No. 17-00411 (May 10, 2017). Then, on March 24, 2017, a customer initiated investment related written complaint involving Lynch’s conduct was settled for $575,000.00 in damages founded on allegations of over-concentration in equities between October 1, 2013 and April 12, 2016, where those stock transactions were not suitable for the customer.
Thereafter, on August 9, 2017, a customer filed an investment related written complaint pertaining to Lynch’s improper conduct, alleging that Lynch failed to follow the customer’s instructions to sell the customer’s energy sector holdings, and effected transactions that failed to conform with the customer’s low tolerance for risk. On October 6, 2017, another customer initiated investment related complaint regarding Lynch’s activities was resolved for $750,000.00 in damages based upon accusations that the customer sustained investment losses from Lynch’s inappropriate recommendations from July 22, 2013 to March 29, 2017.
Lynch’s employment with Wells Fargo Advisors, LLC was terminated on May 2, 2016.
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