Investment fraud lawyers are currently investigating claims on behalf of Wells Fargo customers who suffered significant losses in municipal auction-rate securities. On December 24th, a Financial Industry Regulatory Authority (FINRA) arbitration panel ordered Wells Fargo Advisors to buy back $94 million in securities at face value because the adviser allegedly misrepresented the investments, which would have violated the firm’s obligation to fully disclose all the risks of a given investment when making recommendations.
According to Investment News, the award is related to securities purchased since March 2008 by the now-deceased Robert B. Cohen, his family and Hudson News, Cohen’s affiliated business. Reportedly, Cohen’s family has accused Wells Fargo and one of its advisors of misleading and fraudulent statements regarding municipal auction-rate securities.
Reportedly, when the financial crisis struck and investors found these securities difficult to sell, a Wells Fargo advisor allegedly told the Cohens they could earn back their investment within months with relatively high rates of return. According to investment fraud lawyers, a case is still pending against Timothy P. Shannon, a Wells Fargo adviser based in New Jersey. The FINRA panel also denied Wells Fargo’s request to have the dispute expunged from Shannon’s regulatory records.