Erez Law Files FINRA Claim Against Wells Fargo for Losses Caused by Former Financial Advisor John Leonard in Energy Sector Losses
Posted on Monday, November 5th, 2018 at 9:28 pm
Erez Law recently filed a $550,000 FINRA arbitration against Wells Fargo for high risk energy sector losses.
The former Wells Fargo customer alleges that John Leonard (CRD #2113842), who was a registered representatives of Wells Fargo in Toledo, Ohio from 2008 to 2016, took advantage of his personal relationship with the client and committed rampant securities fraud. Leonard was previously registered with A.G. Edwards & Sons, Inc. in Toledo, Ohio from 1991 to 2008.
The customer entrusted Leonard and Wells Fargo with all of her irreplaceable retirement savings and the vast majority of her net worth, as well as the fun from her late husband that was intended to benefit the client’s son. The client was retired, risk averse and an unsophisticated investor. The client was primarily interested in investing in fixed income investments that would generate a modest yield while preserving her retirement savings.
Erez Law alleges that Leonard implemented a reckless and unsuitable strategy of dangerously concentrating the client’s retirement savings and the trust in high risk energy stocks, including:
- Breitburn Energy Partners
- Calumet Specialty Products Partners
- Emerge Energy Services
- Energy Transfer Partners
- Hi-Crush Partners
- Linn Co.
- Sandridge Mississippian
- Seadrill Partners
- Westmoreland Resource Partners
- Goldman Sachs MLP Inc. Opp. Fund
- Abraxas Petroleum Corp.
It is alleged that by recommending a concentrated position in mostly high risk energy stocks, Leonard further magnified the risks to which the customer was unknowingly exposed. This strategy was blatantly unsuitable. Additionally, Several of the energy companies that Leonard recommended filed for bankruptcy such as Breitburn Energy Partners, Linn Co., Seadrill Partners and Sunedison. Other companies such as Sandridge Mississippian avoided bankruptcy but are trading at distressed levels and have not recovered despite the recent surge in oil prices.
Leonard also recommended other high risk and unsuitable stocks not in the energy sector, including, but not limited to the following:
- KCAP Financial
- Navios Maritime Partners
- Northstar Realty Finance
- Crestwood Equity Partners
Leonard did not obtain the client’s approval before executing transactions in her accounts, and thus the trades were unauthorized. Erez Law also alleges that Leonard failed to disclose to the customer the significant risks inherent to his unsuitable and reckless recommendations and strategy.
It is alleged that the customer sustained losses in excess of $450,000 in high risk and unsuitable securities that Leonard sold her in her retirement accounts. The trust also sustained losses in excess of $100,000. In late 2017, the customer learned of scope of her losses in the investments that Leonard sold her and she ended her relationship with Leonard. Since then, the Erez Law client was forced to sell her home and downsize, as she could no longer afford to maintain her home.
In December 2016, Leonard terminated his employment with Wells Fargo. There is no doubt that Leonard’s termination was related to the volume of customer complaints. In March 2017, Leonard was permanently suspended from the securities industry by FINRA.
In addition to the case above, Leonard recently has been the subject of five additional customer complaints in 2016, according to his CRD report:
October 2016. “Customer alleged his portfolio is over weighted in energy MLP holdings and has declined in value. (1/1/2013-10/5/2016).” The case was settled for $75,000.
September 2016. “Claimant alleges unsuitable investment recommendations were made on or about years 2013 and 2014.” The case was settled for $50,000.
June 2016. “Client verbally alleged unsuitable investments. (6/1/2010-8/31/2015).” The case was settled for $24,000.
June 2016. “Claimant alleges on or about 2014 unsuitable recommendations were made.” The case was settled for $25,000.
May 2016. “Client alleged unsuitable investments. (9/1/2014-5/2/2016).” The customer sought $138,626.29 in damages and the case was settled for $60,000.
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.