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.
Retiring RIA seller David Laidlaw alleges the Carnegie valued his stake on $11.7 million EBITA while pitching potential buyers on $21.3 million.
New tool gives RIAs and family offices AI help vetting private market deals, with some users reportedly halving review time.
Investors got projected returns dressed up as real ones, SEC says
Parents must still act to get the $1,000 federal seed and employer contributions, giving financial advisors a role in the rollout.
FINRA booted Rudy Anguiano from the industry for “conversion - the intentional and unauthorized taking of another person’s property.”
As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor
Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains
