Securities Cases: Stephens Inc. to Pay $900K Fine, FINRA Bans Ex-Wells Fargo Broker, And Former State Street Executive is Accused of Charging Hidden Fees

SEC Files Fraud Charges Against Former State Street Executive
The U.S. Securities and Exchange Commission is filing fraud charges against ex-State Street Corp. (STT) executive Ross McClellan. According to the regulator, McLellan was one of a number of people who purposely charged hidden markups on certain transactions to customers, making the bank $20M in extra revenue.

Addressing the charges, McLellan’s lawyer claims that his client did not commit any securities law violations and that all banks charge client markups on bond transactions to make money. The attorney also noted that it was State Street and not the bank that profited from the charges.

The U.S. Department of Justice has charged McLellan with securities fraud, conspiracy, and wire fraud.

Ex-Wells Fargo Broker to Be Barred
Christopher John Pierce, a former Wells Fargo & Co. (WFC) broker, will be barred from working with any FINRA-registered firm and associating with any member of the self-regulatory organization. Pierce agreed to the bar after he was accused of stealing money from the accounts of banking customers.

The allegations would have occurred while Pierce worked for Wells Fargo Advisors and was simultaneously a personal banker at a Wells Fargo Bank (WFC) in Pennsylvania. Pierce is accused of issuing a debit card under the name of one bank customer. He then purportedly used the card to make unauthorized withdrawals of $1,380 in total, which he used for his own spending. FINRA said that after a complaint was submitted, Pierce took funds from another customer’s account without that party’s permission to put money back into the account where the withdrawals had come from. Pierce has since been fired from Wells Fargo Advisors.

By agreeing to FINRA’s terms, he is not denying or admitting to the allegations.

Stephens Inc. to pay $900K for Inadequate Supervision Involving “Flash” Emails
FINRA is censuring Stephens Inc. The regulator claims that the Arkansas-based firm did not properly supervise internal flash emails that came from research analysts. The emails include information about the industries and companies that Stephens Inc. covers, and the SRO is concerned that inadequate supervision increased the chances that material nonpublic information might have ended up in the emails and could have been improperly used by trading and sales staff.

FINRA said that the inadequate supervisor of these internal flash emails took place from 8/13 through 1/16 and that Stephens did not set up or enforce proper written supervisor procedures about trading related to the flash emails. The emails were sent out so that research analyst could share publicly available news and perspectives about the covered companies with firm personnel, who could then talk about the companies to customers.

One example of an unfortunate occurrence that resulted from the purportedly inadequate supervision is that firm staff forwarded the emails to customers even though they’d been marked for “internal use only.” Also, content from a draft research report that hadn’t been approved ended up in a flash email.

By settling, Stephens is not denying or admitting to the FINRA charges.

Contact our securities fraud law firm today to request your free case consultation.

SEC Accuses Former State Street Exec of Fraud, Courthouse News Service, May 16, 2016

Former Wells Fargo broker agrees to Finra ban, InvestmentNews, May 10, 2016

Read the FINRA Action (PDF)