A former
Wells Fargo Advisors Financial Network broker who coached an elderly client to respond falsely to the firm when it asked her about his excessive commission charges agreed on Wednesday to an eight-month suspension and a $10,000 fine.
A 30-year industry veteran, Richard S. Hughes was registered with Wells Fargo from October 2011 to October 2016, at which time he was terminated, according to the
Financial Industry Regulatory Authority Inc. Over a 13-month span — April 2015 to May 2016 — Mr. Hughes charged a 72-year-old client $34,000 in excessive commissions and fees that resulted from the short-term trading of unit investment trusts and Class A-share mutual funds,
according to the Finra settlement.
The unnamed customer "worked part-time, and held power of attorney over her husband's accounts because he was suffering from a serious illness from which he eventually passed away," according to Finra. She had investment objectives of either moderate growth or moderate income.
In April of 2015, Mr. Hughes recommended the client invest $545,000 in UITs,
which are meant to be held for a fixed term and designed to provide capital appreciation or
dividend income. Over the next year, he recommended the client sell and buy varying amounts of mutual funds and UITs, resulting in $34,000 in excessive commissions, according to Finra.
The transactions triggered an alert in Wells Fargo's supervision systems, according to Finra, and Mr. Hughes falsely told the firm that the "customer was fully informed of the costs associated with the transactions," according to Finra.
Mr. Hughes then met the client and gave her a written script with false information to use when Wells Fargo interviewed her, according to Finra.
"When Hughes' direct supervisor contacted [the client] in May of 2016, [the client] did not utilize the script and instead informed the supervisor that she was not aware of the commissions charged in her account, and that Hughes provided her a statement to read to the firm if she was contacted, and that the statement was false," according to Finra.
Mr. Hughes has retired, said an assistant at his former office in Wilmington, Ill. He was not available to comment. He agreed to the Finra settlement without admitting or denying its findings.
