Erez Law filed a claim against Wells Fargo Clearing Services, LLC related to allegations of unsuitable investment losses related to options trading.
The customer alleges that Peter Waldron (CRD# 4230510), who has been a registered representative of Wells Fargo Clearing Services, LLC in Irvine, California, since 2022, alleges the following in the newly filed FINRA claim:
The Erez Law client was a customer of the broker at UBS Financial Services, Inc. Peter Waldron successfully solicited the client to transfer his UBS Financial Services, Inc. accounts to Wells Fargo. Erez Law alleges that he implemented a speculative, unsuitable, and excessively leveraged investment strategy involving high-risk options trading on a completely discretionary basis.
According to the claim, the client’s investment accounts were enrolled in Wells Fargo’s Private Investment Management (PIM) program, a fee-based investment advisory account whereby Wells Fargo charges an investment advisory fee based on a percentage of the assets in the Erez Law client’s accounts, and the accounts are managed on a completely discretionary basis. As such, the Erez Law client was not contacted prior to the broker executing the transactions in his accounts, and he was permitted to execute transactions without obtaining the Erez Law client’s prior authorization. Wells Fargo touts its PIM program as offering professional portfolio management by an advisor who has satisfied Wells Fargo’s highly selective certification requirements. It is alleged that they recommended and implemented a speculative, unsuitable, and excessively leveraged options strategy that generated significant revenues for Peter Waldron and Wells Fargo at the Erez Law client’s expense, while also causing the Erez Law client to miss out on historic market gains.
Erez Law alleges that the broker failed to adequately disclose the risks attendant to his unsuitable and excessively leveraged investment strategy. Wells Fargo owed the Erez Law client a fiduciary duty to place his interests ahead of its own. It is alleged that he did just the opposite, generating excessive advisory fees and loan interest that could have, and should have, been reduced substantially.
It is alleged that the assets in the Erez Law client’s Wells Fargo account were pledged as collateral for a line of credit, which the Erez Law client was seeking to pay off. It is alleged that the Erez Law client repeatedly verbally and in writing emphasized to the broker that he was uncomfortable with the amount of leverage in his accounts and wanted to pay down the balance. The broker advised the Erez Law client against liquidating assets in his accounts to pay off the line of credit, and instead recommended, in writing, that the Erez Law client invest the assets and use the profits to pay down the balance.
By not selling assets to pay down the credit line, the claim alleges that Peter Waldron and Wells Fargo were able to generate significantly greater investment advisory fees from the Erez Law client’s accounts, because Wells Fargo charged the Erez Law client advisory fees of 1% per year of the assets in the accounts. In addition, the broker received a portion of the monthly interest charge from the Erez Law client’s credit line on his commission runs, giving him an additional incentive not to have the Erez Law client pay off the credit line.
According to the claim, by not paying off the credit line, Wells Fargo was also able to generate substantial interest charges on the credit line, which charged the Erez Law client an annualized interest rate of 5.8-6.35% per year. The advisory fee on the Erez Law client’s PIM accounts was 1.0%. As such, his covered call strategy would have needed to generate annual returns of 6.8% (or higher, at times) just to break even after paying the interest charges and advisory fees.
It is alleged that the broker represented to the Erez Law client that he had a conservative options strategy that would protect the Erez Law client’s accounts against declines in the stock market and generate positive returns regardless of whether the stock market was up or down. In fact, it is alleged that the broker represented to the Erez Law client that his strategy would generate positive returns even after paying the monthly interest charge on the line of credit.
Erez Law alleges that the broker misleadingly stated in emails to the Erez Law client that the option losses showing on the Wells Fargo portal were “phantom losses.”
According to the claim, Peter Waldron implemented a “covered call” options strategy that was destined to fail and had no realistic hope of ever generating a consistent net profit for the Erez Law client. The complaint alleges that Peter Waldron implemented this speculative and unsuitable covered call strategy using options linked to extremely volatile stocks, including Tesla, Super Micro Computer stocks, and primarily from the volatile technology sector.
Erez Law alleges that when the volatile technology stocks appreciated significantly, rather than allow the stock to be “called away” at the options’ expiration date, the broker routinely closed out the call option position at a significant loss and sold new covered calls on the same stock. The Erez Law client experienced significant gains in some of the underlying stocks, which were offset by losses in the call options on those same stocks. His strategy was similarly inherently flawed in the event of significant downside volatility in the underlying stock.
The complaint alleges that Peter Waldron was able to pull off this unsuitable, costly, and speculative strategy by providing the Erez Law client with incomplete and misleading spreadsheets via e-mail regularly, evading Wells Fargo supervision. The complaint alleges that he engaged in prohibited communications through the use of unmonitored and unsupervised text messages from his personal mobile device.
Additionally, it is alleged that Peter Waldron’s unsuitable strategy caused the Erez Law client significant losses and deprived the Erez Law client of the ability to participate in market returns. Erez Law alleges that Peter Waldron was only able to succeed in his misconduct due to Wells Fargo’s failure to adequately supervise the broker.
Peter Waldron Background and Previous Customer Complaints
He was previously registered with UBS Financial Services Inc. in Brea, California, from 2011 to 2022.
He has been the subject of one customer complaint, according to his CRD report:
November 2024. “Plaintiff alleges that beginning in April 2022, the financial advisor made unsuitable investment recommendations.” The case is currently pending.
How to File a Claim Against Peter Waldron
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 Peter Waldron’s customers.
Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If you 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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