In July 2018, a former client of Wells Fargo won an award in a FINRA arbitration for compensatory damages for $4,179,116, $831,583.48 in prejudgement interest, $2,693,025.41 in attorneys’ fees, $500,000.00 in punitive damages, $206,324.04 in costs, $165,718.50 in the remission of Advisory Fees paid, $101,670.21 in monetary sanctions, the non-refundable $500 filing fee, as well as 9% interest on the settlement amount totaling $8,575,767.43 at the rate of 9% per annum from the date of the award until paid in full. RBC Capital Markets was also responsible for repaying $250 of the non-refundable filing fee. The investors were clients of Wells Fargo Clearing Services, LLC financial advisor Marc Rogers (CRD# 1008145).
The causes of action included breach of fiduciary duty of care; recommendation of unsuitable securities and investment strategies; professional negligence; unauthorized trading and per se unsuitability; breach of contract; breach of implied covenant of good faith and fair dealing; breach of fiduciary duty of loyalty; negligent misrepresentations and omissions; manipulative and deceptive practices; constructive fraud; negligent supervision; and rescission of investment advisory contracts and restitution related to Puerto Rico bond losses. The FINRA arbitration hearing was conducted in Portland, Oregon.
The claimant Sam Duncan was the former chief executive of retailer OfficeMax and grocer SuperValu. Duncan filed the claim in 2016 citing that Rogers improperly invested in the assets despite his stated preference for conservative investments. According to Rogers’ CRD, “Claimant alleges that investment recommendations made between 2007 to 2014 were misrepresented and unsuitable.” The bonds that Rogers recommended to Duncan were not suitable for Duncan and other conservative investors. According to records, Duncan’s investment accounts held almost entirely Puerto Rico bonds, and at one point Duncan held about $12 million worth of Puerto Rico bonds.
It is alleged that Wells Fargo analysts flagged Puerto Rico bonds as inappropriate for conservative investors yet Wells Fargo did not ensure that Rogers and advisors across the country followed these guidelines.
Puerto Rico suffers from long-term financial and economic deficiencies that rendered its credit increasingly more speculative. The deterioration of Puerto Rico’s financial condition culminated in its debt being downgraded to junk status or speculative (below investment grade). For the past several years, Puerto Rico has been struggling with compounding debt and economic decline. As a result, the value of Puerto Rico’s municipal tax-free bonds has considerably fallen. Since September 2013, when the steep decline in Puerto Rico bond values began, investors holding these bonds have suffered massive losses. In May 2017, Puerto Rico filed for bankruptcy protection from creditors in what is being described as the largest municipal bankruptcy filing in history. This filing came about after Governor Ricardo Rossello failed to persuade Puerto Rico’s creditors to settle for a reduced payment amount, the government faced new lawsuits pending from their defaults, and the proposed 10-year fiscal plan only (see our previous post here) that was approved in March 2017 covered a quarter of the debt payments necessary for the island.
Rogers has been registered with Wells Fargo Clearing Services, LLC in East Palo Alto, California since 2010. Rogers has been the subject of four additional customer complaints between 1998 and 2014, one of which was denied and one was closed without action, according to his CRD report.
Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, Wells Fargo Clearing Services, LLC may be liable for investment or other losses suffered by Rogers’ customers.
Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If and have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.
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