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Compliance Corner: FINRA, Wells Fargo
Editorial Staff
8 September 2020
FINRA, Wells Fargo As a result, between January 2011 and August 2016, Wells Fargo’s representatives recommended at least 101 potentially unsuitable switches that required customers to incur both surrender fees and substantial new sales charges. For example, one former representative told a customer that he ought to liquidate a variable annuity with a surrender value of $126,681 - resulting in a surrender fee of $5,070 - and then use the proceeds to purchase class A mutual funds with upfront sales charges to the value of $5,531. In addition to incurring $10,601 in surrender fees and upfront sales charges, the recommended switch resulted in the customer earning less annual income than she would have earned had she not sold the variable annuity. The two firms have neither admitted to nor denied the charges.
, unless withheld by the qualified supervisor,” the firms did not, in fact, have a switch alert to identify switches from variable annuities to investment company products during the relevant period and the firms did not send 'switch letters' to affected customers.