FINRA Barred Former Wells Fargo Broker for Advising Customers to Invest Millions in Software Company Without Permission

March 23, 2021 Author: Brian Levin
Business man

Scott W. Reed Allegedly Raised $3.5M for CA Company Without Notifying or Obtaining Approval from Wells Fargo

Former Wells Fargo Broker Scott Wayne Reed has been barred by the Financial Industry Regulatory Authority (FINRA) for allegedly participating in private securities transactions without providing prior notice or receiving approval from his brokerage firm. Reed allegedly recommended and facilitated transactions totaling $3.5 million. 

Levin Law, P.A. represents individual and institutional investors who have suffered losses due to stockbroker fraud and other financial misconduct. If you have suffered losses because of a broker’s, investment advisor’s, or other financial professional’s recommendation and sale of a private security, contact Levin Law, P.A. at (855) 419-2412 or via email contact@levinlawpa.com for a free consultation. 

Violation of FINRA Rule 3280

According to publicly available information, Scott Wayne Reed has been registered with a FINRA member firm since 1999. He became employed by Wells Fargo Clearing Services, LLC (Wells Fargo) as a General Securities Representative, General Securities Principal, and General Securities Sales Supervisor in April 2016. Wells Fargo filed a Form U5 with FINRA indicating that Mr. Reed had voluntarily resigned from the brokerage on April 7, 2020. 

According to publicly available information, FINRA opened an investigation of Mr. Reed following a U-5 disclosure indicating that while employed with Wells Fargo, Mr. Reed “recommended and facilitated investment opportunities in investments sold away from and not offered by Wells Fargo.” Pursuant to FINRA Rule 3280, registered members are prohibited from participating in private securities transactions without first notifying his or her firm in writing about the proposed transaction and obtaining approval.

Violation of FINRA Rule 2010

A violation of FINRA Rule 3280 is, in turn, a violation of FINRA Rule 2010, which requires members to “observe high standards of commercial honor and just and equitable principles of trade.” As noted by the Letter of Acceptance, Waiver, and Consent, Mr. Reed was found to have violated both rules as a result of his conduct. Mr. Reed was subsequently barred from acting as a broker or otherwise associating with a broker-dealer firm.

FINRA Facts and Findings

It is alleged that Mr. Reed, in early 2019, while employed by Wells Fargo, solicited at least six individuals, including two Wells Fargo customers, to invest in a California software and web development company. Reed engaged in transactions totaling at least $3.5 million for the software company. He allegedly received “selling compensation” of over $190,000 from the company and personally invested over $200,000. 

The transactions were done without first giving written notice to Wells Fargo describing in detail the proposed transaction, his role in the transaction, and whether he would be receiving any selling compensation. Furthermore, according to the Form U-5 filed by the broker-dealer, Mr. Reed failed to obtain firm approval to participate in said transactions. 

Mr. Reed’s participation in the transactions involved providing investors written materials, as well as oral and written communications about the company. Additionally, he assisted investors in sending or receiving transfers of funds, even personally guaranteeing half of one client’s investment. 

Reed is currently facing a regulatory investigation initiated by the Arizona Corporation Commission. Allegations include fraud, selling away, failure to timely amend Form U-4 and the sale of unregistered securities.

Contact Levin Law for a Free Case Evaluation

If you have suffered losses as a result of a broker’s or financial advisor’s unsuitable investment recommendation, you might be able to recover some of your losses through a FINRA arbitration. Levin Law has extensive experience recovering money from broker-dealers and other financial institutions for their representative’s misconduct.

Contact Levin Law managing partner Brian Levin at (855) 419-2412 to discuss your legal options. Levin Law accepts most cases on a contingency-fee basis, meaning clients are not responsible for Levin Law’s attorney fees unless money is recovered on their behalf.

About Levin Law

Levin Law is a premier national securities and class action law firm with significant experience. Brian Levin, Levin Law’s founding attorney, has helped recover in excess of $100,000,000 through securities arbitration and litigation for individual and institutional investors throughout the country and the rest of the world. Levin Law represents retirees, individual investors, high-net-worth investors, ultra-high-net-worth investors, institutions, family offices, trusts, publicly held companies, and others.

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