Wells Fargo Clients May Have Securities Arbitration Claim

by InvestorLawyers on April 16, 2012

in FINRA,Securities Fraud,Suitability

According to stock fraud lawyers, clients of Wells Fargo Advisors LLC may be able to recover losses through Financial Industry Regulatory Authority arbitration. A claim was recently filed with on behalf of a Wells Fargo client because of the sales practices of one or more of its brokers. Allegedly, the client suffered significant losses, which amounted to a substantial part of his life savings, due to an unsuitable recommendation by a Wells Fargo broker. The client was persuaded to invest in several “penny stocks.” The client purchased shares of Camac Energy, Tombstone Exploration and Blue Earth.

Wells Fargo Clients May Have Securities Arbitration Claim

The claim states that clients purchased the penny stocks based upon statements that the stocks were recommended by Wells Fargo. Furthermore, the stocks were represented, even to unaggressive investors, as good investments. However, the stocks were actually very high risk and, when the stocks fell, large sums of money were lost by investors. In addition, the stocks were recommended by the broker because of research done by Liviakis, a third-party analyst, and not because of Wells Fargo’s research or recommendation. According to stock fraud lawyers, Liviakis is not currently facing any charges or claims of misconduct.

Securities fraud attorneys believe that many investors could have been defrauded in this manner, based upon the broker’s sales methods. High risk investments, such as penny stocks, are unsuitable for investors with a conservative portfolio and low risk tolerance. Prior to recommending an investment to a client, brokers are required to perform the necessary due diligence to establish whether or not the investment is suitable for the client, given their age, investment objectives and risk tolerance.

Wells Fargo clients who suffered financial losses after being convinced to invest in unfamiliar or low-priced stocks may have a valid securities arbitration claim. To find out more about your legal rights and options, contact a securities fraud attorney at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

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