Former Wells Fargo Rep Suspended
Finra has suspended a former Wells Fargo advisor for allegedly making unsuitable recommendations in unit investment trusts and then trying to get a client to make false statements about commissions, according to a letter of acceptance, waiver and consent published by the industry’s self-regulator.
From April 2015 to May 2016, Richard Hughes allegedly recommended that a 72-year-old client switch frequently between unit investment trusts and class A shares of mutual funds, both of which are meant to be held long-term, Finra says.
The markups on the UITs ranged from 3.5% and 3.8% while the up-front sales charges on the mutual funds were between 2.7% and 3%. During the period in question, the client’s account was charged more than $34,000 in excessive commissions and fees as a result, according to the letter of consent.
When one of the client’s mutual funds was sold less than a year after its purchase, it triggered a Wells Fargo alert. Hughes then allegedly lied to his direct supervisor that the client was fully aware of the costs involved, Finra says.
When the supervisor told Hughes that he would verify this information with the client, Hughes allegedly met with the client and gave her a written script to read to the supervisor, with much of the information in the script being false, according to the letter of consent.
The client, however, allegedly didn’t read from the script when the supervisor contacted her, and instead told him that she wasn’t aware of the commissions she was getting charged and that Hughes had given her a script to read to the supervisor, Finra says.
Hughes consented to an eight-month suspension and a $10,000 fine, without admitting or denying Finra’s findings, according to the letter of consent.
Hughes had been in the securities industry since 1986 and joined Wells Fargo in 2011, Finra says. The firm terminated him effective October 2016, according to the letter of consent.
Hughes then registered at Summit Brokerage Services in November 2016, according to his BrokerCheck profile. He resigned from the firm on June 1 of this year, according to the letter of consent.