Two former brokers working for Wachovia Securities were charged with securities fraud by the Securities and Exchange Commission. The government says William Harrison and Eddie Sawyers defrauded dozens of Wachovia customers out of at least $8 million. Wachovia is now known as Wells Fargo Advisors.
According to court records, Harrison and Sawyer told their clients that they had a “foolproof” method of trading options and promised a 35%, risk free return.
To shield the trading activity from compliance officials at Wachovia, the two opened an account in the name of Harrison’s wife.
The SEC says,
“Between approximately December 2007 and October 2008, Sawyers and his co-defendant William K. Harrison used misrepresentations and omissions of material fact to defraud at least forty-two Wachovia brokerage customers of at least $8 million in customer funds.
On or around December 2007, Harrison and Sawyers, acting under the d/b/a “Harrison/Sawyers Financial Services,” began offering their Wachovia customers an investment opportunity outside of Wachovia through an advisory firm they owned. They misrepresented that the investment opportunity was guaranteed to make a 35% return, with no risk of loss of principal.
In those instances when customers were informed that their monies would be used for trading options, Harrison and Sawyers misrepresented the riskiness of their trading strategy by telling customers that they had a foolproof approach to trading options and that their principal investment was secure and would make handsome returns regardless of market volatility. Harrison and Sawyers either opened accounts with optionsXpress in the client’s name or commingled the client’s funds in accounts opened in Harrison’s wife’s name or a joint account in the name of Harrison and his wife…
Although the trading strategy that Harrison and Sawyers employed was initially successful, it soon resulted in substantial investor losses. By October 2008, they had depleted the vast majority of the money they had raised from investors.”
The scheme apparently went undetected for 10 months.
Although the SEC has charged the two brokers, Wells Fargo Advisors will likely be forced to make the customers whole. Brokerage firms have a duty to supervise their employees, even if their brokers operate an independent or franchise office.
As noted in the SEC’s court papers, “Harrison and Sawyers, acting under the d/b/a ‘Harrison/Sawyers Financial Services,’ began offering their Wachovia customers an investment opportunity outside of Wachovia through an advisory firm they owned.” Selling away occurs when a broker sells an investment outside of the brokerage firm or without the firm’s knowledge.
Although the Wachovia / Wells Fargo didn’t profit from the scheme or earn any commissions from the transactions, they can still be found liable for the customers’ losses. Brokerage firms have a duty to supervise their employees. In our experience, selling away most often occurs in small, independent branches that lack supervisory personnel.
Harrison and Sawyers Head to Prison
In addition to the SEC charges, prosecutors charged William Harrison with federal mail fraud charges. He received a sentence of six and one half years in prison.
If you have been defrauded by a broker, contact the stockbroker fraud lawyers at Mahany Law. We have helped people throughout the United States.
Our skilled team of asset recovery lawyers have successfully pursued claims against stockbrokers, insurance agents, welfare benefit plans, offshore assets, Ponzi scheme promoters and even lawyers. If your claim must be arbitrated before the Financial Regulatory Authority (FINRA), we can help. In many instances our services are handled on a contingent or success fee basis meaning you do not pay unless we win.
For more information or a no obligation, no nonsense consultation, contact us online by email at or by phone . We urge you to also visit our stockbroker fraud page for more information on suing stockbrokers for investment losses.
We handle cases nationally and on a contingent fee basis