James Eugene Holmes III, of Winston Salem, North Carolina a stockbroker formerly associated with Wells Fargo Clearing Services was recently sanctioned and suspended in connection with alleged rule violations. Letter of Acceptance, Waiver, and Consent No. 2022075386201.
According to the AWC, Holmes “recommended options transactions to a customer without having a reasonable basis to conclude that the transactions would be in the customer’s best interest or suitable based on her investment profile.” The AWC states that the customer told Holmes that she was looking for income-generating investments that would help finance the purchase of a new home in the following year or two. She also supposedly told him that she could not afford any principal loss and did not wish to be exposed to significant risk.
Notwithstanding the foregoing, Holmes “recommended uncovered (or naked) put options transactions that created significant risk exposure in the customer’s account, including in volatile securities.” According to FINRA, such strategies have substantial risks and limited potential profits. The transactions resulted in losses in the customer’s account, according to FINRA, which states that Mr. Holmes “did not have a reasonable basis to believe that these transactions were suitable for the customer and in her best interest.” Holmes was found to have violated Regulation Best Interest, and he was suspended him from associating with any member firm for a period of eight months and ordered to pay of $10,000.
FINRA Conduct Rule 2111 provides that:
(a) A member or an associated person must have a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer, based on the information obtained through the reasonable diligence of the member or associated person to ascertain the customer’s investment profile.
FINRA Public Disclosure also shows that April 2025, Holmes was the subject of an customer initiated, investment related, complaint alleging that Holmes made unsuitable investment recommendations, and recommended an unsuitable investment strategy. The customer is seeking $500,000 in damages.
FINRA Public Disclosure also shows that Holmes was terminated by Wells Fargo in connection with allegation that he engaged in unauthorized trading and made discretionary trades in several customer accounts.
The Guiliano Law Group, P.C.
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