Finra arbitrators ordered Wells Fargo and one of its former financial advisers to pay two investors $731,587 for allegedly churning their accounts.
Edward A. and Wendy M. Pesicka filed an arbitration claim on October 5, 2017, alleging that Gregory T. Pease, while affiliated with Wells Fargo Clearing Services and Wells Fargo Advisors Financial Network, altered the Pesickas’ risk profiles on their account applications, “routinely churned” their investments and placed them in investments that exceeded their risk tolerance.
“Claimants allege that many of these investments were made with the sole purpose of generating additional commission or fees in Pease’s favor,” states the Aug. 8 award.
The investors accused Wells Fargo, Pease, Pease’s partner John P. Rauch and Rauch Pease Wealth Management of breach of fiduciary duty, fraud, negligence, unjust enrichment, aiding and abetting fraud and conspiracy, among other causes of action. Pease was serving as a “discretionary account benefit administrator” during the timeframe of the allegations, according to the award document.
A three-person, all-public Financial Industry Regulatory Authority Inc. panel based in Pittsburgh found Wells Fargo Clearing Services and Pease jointly and severally liable and awarded the Pesickas $731,587 in compensatory damages. Wells Fargo and Pease also must pay 6% annual interest on the award from October 6, 2017, through the date the award is paid in full.
Edward A. Pesicka is chief executive of Owens & Minor, a health care firm based in the Richmond, Virginia area. Attorneys representing the Pesickas did not respond to a request for comment.
A Wells Fargo spokesperson declined to comment.
The Pesickas sought damages of between $6.5 million to $9.4 million and treble damages. They also asked for attorneys’ fees and costs of $1.2 million. The arbitrators denied punitive damages, treble damages and attorneys’ fees.
Pease is no longer registered as a broker or an investment adviser, according to his BrokerCheck profile. Rauch is dually registered and continues to work at Wells Fargo Clearing Services.
From outstanding individuals to innovative organizations, find out who made the final shortlist for top honors at the IN awards, now in its second year.
Cresset's Susie Cranston is expecting an economic recession, but says her $65 billion RIA sees "great opportunity" to keep investing in a down market.
“There’s a big pull to alternative investments right now because of volatility of the stock market,” Kevin Gannon, CEO of Robert A. Stanger & Co., said.
Sellers shift focus: It's not about succession anymore.
Platform being adopted by independent-minded advisors who see insurance as a core pillar of their business.
RIAs face rising regulatory pressure in 2025. Forward-looking firms are responding with embedded technology, not more paperwork.
As inheritances are set to reshape client portfolios and next-gen heirs demand digital-first experiences, firms are retooling their wealth tech stacks and succession models in real time.
