by Brian Mahany
Wells Fargo Advisors agreed to pay $2 million to settle charges that one of its brokers sold unsuitable investments to clients in their 80’s and 90’s. The Financial Industry Regulatory Authority (FINRA) claimed Alfred Chen sold reverse convertible notes to many of his elderly clients. Reverse notes (RCN’s) are a complex investment vehicle not usually found in the portfolio of older and retired persons.
Why RCN’s? According to Investopedia, these notes carry high commissions meaning the broker pockets more than on routine stock or bond trades. They are often quite risky and “toxic.”
Chen was so successful in selling these exotic securities that Wells Fargo promoted him to a senior financial consultant. According to FINRA, he is now out of the securities business. During his tenure as a stockbroker, however, he racked up 23 customer complaints.
In addition to the RCN complaints, FINRA says that Chen traded securities in the accounts of two dead customers.
Stockbrokers are obligated to make recommendations that are suitable for their clients. Whereas a younger, wealthier client might be willing to accept the high risk of reverse convertible notes, these investments are not recommended for people living on fixed income who need their investments for living expenses.
Unauthorized trading, especially in the accounts of dead clients, is an obvious violation too.
Claims against stockbrokers are usually handled by arbitration. Although the filing fees can often exceed $1000, the process is generally considered more efficient and much quicker than law suits filed in courts.
If you received unsuitable investment advice or unauthorized trades were made in your account, contact an experienced securities fraud lawyer. The attorneys at Mahany & Ertl have helped many victims of investment fraud get back their hard earned money. For a no obligation consultation, contact attorney Brian Mahany at (414) 704-6731 (direct) or by email at
Mahany & Ertl – America’s Fraud Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan & Portland, Maine. Services available in most locations.