Former Wells Fargo Advisors, LLC, Wachovia Securities, LLC, Wells Fargo Clearing Services, LLC, and Wells Fargo & Company Clients Win FINRA Arbitration for $430,000 for Losses Due to Bradley Smegal’s Ponzi Scheme
Posted on Monday, November 19th, 2018 at 11:43 am
In October 2018, former clients of Wells Fargo Advisors, LLC, Wachovia Securities, LLC, Wells Fargo Clearing Services, LLC, and Wells Fargo & Company won an award in a FINRA arbitration for compensatory damages for $430,000 for losses sustained from Wells Fargo Advisors, LLC, Wachovia Securities, LLC, Wells Fargo Clearing Services, LLC, and Wells Fargo & Company. The investors were clients of financial advisors Charles Zajicek (CRD# 1140305) and Christopher Most (CRD# 3270353) and were part of a Ponzi scheme by Bradley Smegal (CRD# 716056).
The causes of action included declaratory judgment, respondeat superior, agency, securities fraud, consumer fraud, common law fraud, theft under Minn. Stat § 604.14, conversion, negligent misrepresentation, breach of fiduciary duty, unsuitability, negligence, negligent supervision, unilateral mistake with inequitable conduct, breach of contract, unjust enrichment, and estoppel. The causes of action related to the claimant’s allegation that Smegal was operating a Ponzi scheme with customers assets amounts of their assets and that he convinced the claimants to transfer significant amounts of their assets to companies owned and/or operated by Smegal, including Silvermere, LLC, Gold Coast Trading Partners, LLC, and Merciel International, LLC. Claimants further alleged that the Wells Fargo entities were vicariously liable to Claimants, as Smegal’s conduct was foreseeable. The FINRA arbitration hearing was conducted in Hearing Site: Minneapolis, Minnesota.
Wells Fargo Clearing Services, LLC and Wells Fargo Advisors, LLC were found to be jointly and severally liable for and shall pay to four sets of claimants the sum of $135,000, $45,000, $125,000 and $125,000 in compensatory damages plus interest on the above-stated sum at the rate of 10% per annum from and including the date this award is served through and including the date this award is paid in full.
In August 2017, Smegal from barred by the Securities and Exchange Commission (SEC) for his participation in an offering of a penny stock.
In August 2016, Smegal was convicted of securities fraud.
In February 2012, Smegal was barred by FINRA after he failed to comply with the FINRA request for information.
Smegal was registered with Wells Fargo Advisors, LLC in Minneapolis, Minnesota from 2006 to 2011, when he was terminated regarding, “Discharged for violations of firm policy regarding outside business activities that were not approved by the firm and soliciting firm clients for investment in the activities.”
Smegal has also been the subject of five additional customer complaints between 1996 and 2014, according to his CRD report.
Zalicek was registered with Wells Fargo Advisors, LLC in Bloomington, Minnesota from 1998 to 2015. Zajicek is currently not registered with any brokerage firm. Zajicek has also been the subject of one additional customer complaint from 2015, according to his CRD report.
Most has been registered with Growth Capital Services, Inc. in San Francisco, California since August 2018. Most was previously registered with Wealthforge Securities, LLC in Richmond, Virginia from January to August 2018, and with Morgan Stanley in Minneapolis, Minnesota from 2013 to January 2018.
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 Advisors, LLC, Wachovia Securities, LLC, Wells Fargo Clearing Services, LLC, and Wells Fargo & Company may be liable for investment or other losses suffered by Smegal’s 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.