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Nicholas Harper, a registered representative with Wells Fargo Advisors, LLC, was permanently barred from the securities industry for life after consenting to findings that he failed to cooperate with an investigation into discretionary trading activities. Letter of Acceptance, Waiver, and Consent No. 2013038203401 (May 13, 2015).
According to the AWC, Harper was employed with Wells Fargo Advisors from October 16, 1997 until August 7, 2013, when Harper resigned from his employer after his firm’s compliance division conducted a review of trading in his clients’ accounts. FINRA, according to the AWC, sent Harper a request to appear for testimony on the record pursuant to Rule 8210. Harper’s attorney indicated to FINRA’s staff that Harper was aware of their requests but would not be appearing for the testimony at any point. Harper was found to have violated FINRA 8210 and 2010 as a result, leading to his permanent bar.
When individuals invest money with a firm, a common issue to be considered is who will make the decisions on the investment account. The investor has the final say regarding such decisions unless he/she provides discretionary authority to a registered representative often referred to as a financial professional or advisor. In cases where discretionary authority is provided, the registered representative is able to make decisions with the investor’s money without consultation about price, the type/amount of securities, timing of trades, etc.
By definition, a broker is liable for making unauthorized trades without the customer’s prior authorization. Absent written discretion, it is a violation of Section 10(b) of the Exchange Act, and Rule 10b-5, as promulgated thereunder, to effect transactions in customer accounts without their prior authorization or consent.
Customers also have a duty to review securities purchase and sale confirmations and review their securities accounts. If a stockbroker has placed unauthorized transactions in a customer account, the customer under most circumstances has a duty to act, or a duty to complain, or else generally, the customer may be deemed to have ratified these transactions, with actual or imputed knowledge, by doing nothing. Under such circumstances, a customer’s damages may be limited to the time they knew or should have known about the unauthorized transactions.
FINRA registered representatives like Harper who do not cooperate with FINRA’s investigations often face a permanent bar from practicing in the securities industry as such lack of cooperation violates FINRA’s Rule 8210 – requiring that no member or person shall fail to provide information or testimony or permit an inspection and copying of books, records, or accounts pursuant to the rule. FINRA typically accompanies a Rule 8210 violation with a Rule 2010 violation when individuals, according to FINRA, do not appear to observe high standards for commercial honor and just and equitable principles of trade.
Securities brokerage firms have a duty to supervise their brokers and the sales practices of their brokers, and to review customer statements for, among other things, evidence of suitability, unauthorized trading, or excessive activity.
Guiliano Law Group
If you have been the victim of securities fraud and you have a complaint, you should consult with an attorney. The practice of Nicholas J. Guiliano, Esq., and The Guiliano Law Group, P.C., is limited to the representation of investors in claims for fraud in connection with the sale of securities, the sale or recommendation of excessively risky or unsuitable securities, breach of fiduciary duty, and the failure to supervise. We accept representation on a contingent fee basis, meaning there is no cost unless we make a recovery for you, and there is never any charge for a consultation or an evaluation of your claim. For more information contact us at (877) SEC-ATTY.