Sven Bernhard Karlen, of Lebanon, New Hampshire, a stockbroker formerly registered with Wells Fargo Advisors, has been fined $15,000.00 and suspended for six months from associating with any Financial Industry Regulatory Authority (FINRA) member firm in any capacity after consenting to findings that he effected trades in customer accounts without authorization, mismarked order tickets, caused his firm’s records and books to be inaccurate, and made false statements to his firm concerning his trading. Letter of Acceptance, Waiver and Consent, No. 2015044533901 (Nov. 23, 2016).
According to the AWC, from January of 2008 to January of 2015, Karlen effected trades in investment accounts belonging to twenty-one Wells Fargo customers despite lacking proper authorization to trade on a discretionary basis. The AWC revealed that in nearly all circumstances, customers had not provided Karlen with approval prior to Karlen effecting such trades. Additionally, Wells Fargo Advisors had not deemed the customers’ accounts to be approved for purposes of discretionary trading. FINRA found that Karlen’s conduct in this regard was violative of FINRA Rule 2010, NASD Rule 2110 and NASD Rule 2510(b).
The AWC additionally stated that Karlen mismarked the order tickets in twenty-one customer accounts by not indicating that such trades occurred on a discretionary basis. Karlen reportedly caused his firm’s books to be inaccurate, which violated Securities Exchange Act Section 17(a) and Rule 17a-3. As such, FINRA found Karlen’s conduct to be violative of FINRA Rules 2010, 4511, and NASD Rule 3110.
Apparently, Karlen lied to his firm concerning his discretionary trading in the firm’s annual attestations and compliance questionnaires that were administered to Karlen between 2009 and 2014. Particularly, Karlen stated falsely that he never had exercised such discretion in the accounts of customers. FINRA found that Karlen’s conduct in this regard was violative of FINRA Rule 2010.
FINRA Public Disclosure reveals that Karlen was terminated by Wells Fargo Advisors in February of 2015, based upon allegations that Karlen engaged in unauthorized discretionary trading, provided improper advice to customers concerning proxy voting, and distributed a private investment’s information to customers of the firm.
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