Wells Fargo Stockbroker Barred For Suitability
Charles Henry Frieda, of Irvine, California, a stockbroker formerly registered with Wells Fargo Clearing Services, 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 the firm’s customers. Letter of Acceptance, Waiver and Consent, No. 2015045713302 (Dec. 11, 2017).
According to the AWC, from November of 2012 to October of 2015, Frieda and a second Wells Fargo stockbroker made recommendations to fifty customers regarding a faulty investment strategy, which led customers’ investment accounts to contain over-concentrations in one sector of the equity markets. Apparently, the allocation of customers’ assets consisted of four risky energy sector investments. The AWC stated that the high concentration levels coupled with the energy sector volatility had exposed those customers to substantial risk of investment losses.
The AWC then indicated that between November of 2012 and October of 2015, Frieda reportedly neglected to adequately consider or procure the correct information about the investment profiles of customers advised by him, precluding him from having the proper information to conclude that the investment strategy and securities recommended by him were suitable. Particularly, Frieda failed to consider the customers’ income needs, liquidity needs, net worth, investment horizon, tolerance for risk and experience with investing. Consequently, Frieda reportedly failed to adequately determine the risks pertaining to his investment strategy, including the risks to customers who maintained large portions of their net worth in securities within the energy sector.
The AWC further stated that in 2015, during which time the energy markets became volatile, Frieda doubled down, making unsuitable investment recommendations for customers to continue to over-concentrate their assets according to his investment strategy at a time that he was not cognizant of each investors’ ability to continue incurring losses. The AWC stated that Frieda’s investment recommendations ultimately led customers to collectively sustain several million dollars in investment losses. FINRA found that Frieda’s conduct in that regard was violative of FINRA Rules 2010 and 2111.
FINRA Public Disclosure reveals that Frieda has been identified in fifty-two customer initiated investment related disputes containing allegations of his wrongdoing while employed with Wells Fargo Advisors. For example, on March 24, 2017, a customer initiated investment related written complaint involving Frieda’s conduct was settled for $575,000.00 in damages based upon allegations of suitability in reference to stock transactions effected in the customers’ accounts.
Subsequently, a customer initiated investment related arbitration claim involving Frieda’s conduct was settled for $55,000.00 in damages founded upon accusations that Frieda over-concentrated customers’ assets in equities that were not suitable. FINRA Arbitration No. 17-00169 (Apr. 25, 2017). Then, a customer initiated investment related arbitration claim regarding Frieda’s activities was resolved for $125,000.00 in damages supported by allegations that Frieda made misrepresentations to the customer. FINRA Arbitration No. 17-00411 (May 10, 2017).
Thereafter, on July 28, 2017, a customer initiated investment related written complaint pertaining to Frieda’s conduct was settled for $125,000.00 in damages supported by accusations of poor performance and suitability relating to transactions effected in the customer’s account between September 6, 2013 and August 22, 2017. On September 6, 2017, another customer initiated investment related written complaint concerning Frieda’s conduct was settled for $20,000.00 in damages based upon allegations that Frieda over-concentrated the customer’s assets in oil & gas foreign equities from May 14, 2015 to May 23, 2017.
Furthermore, on September 22, 2017, another written complaint was settled to resolve allegations of speculative and unsuitable small cap energy sector stock positions as well as the failure to implement stop loss techniques. Thereafter, on October 6, 2017, a customer initiated investment related complaint regarding Frieda’s activities was resolved for $750,000.00 in damages supported by allegations that between July 22, 2013 and March 29, 2017, Frieda made unsuitable equity recommendations to the customer.
Frieda’s registration with Wells Fargo Clearing Services, LLC was terminated on September 20, 2017.
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