FINRA Sanctions Wells Fargo, Targets Three Individuals

The Financial Industry Regulatory Authority censured and fined Wells Fargo Advisors LLC $12,500 for failing to provide customers and the Municipal Securities Rulemaking Board with correct yield information from muni securities transactions.

FINRA also barred an individual from the industry, filed a complaint against another, and suspended and fined a third in three separate enforcement actions involving municipal securities.

The self-regulatory authority disclosed the actions Tuesday in a notice of monthly disciplinary actions.

St. Louis-based Wells Fargo neither admitted nor denied FINRA’s findings but agreed to the sanctions. One firm official declined to comment and another did not return calls.

FINRA found that, during the third quarter of 2008, Wells Fargo failed to disclose in writing to customers the lowest yield in 21 muni transactions, violating the MSRB’s Rule G-15 on confirmation, clearance, settlement and other uniform practices.

The self-regulator also found the firm failed to report the correct yields from the transactions to the board’s real time transaction reporting system, violating Rule G-14, which governs trade ­reporting.

FINRA barred Hansel Clarence Cua Lee, a former registered representative in Burbank, Calif., from associating with any of its members after he converted customer funds to his own.

Lee formerly worked at Banc of America Investment Services Inc., which appears to have fired him. According to FINRA, Lee has not been employed in the industry for about three years.

Lee sold about $500,000 of Treasuries and municipal securities in a customer’s account without the customer’s permission or knowledge, FINRA said.

He opened a checking account in the customer’s name, placed the money in the account, and then requested a $500,000 check to be drawn on the account made payable to a company called Capital Group that he owned and controlled, according to FINRA.

When that check could not be processed because of irregularities, he allegedly requested two smaller checks totaling $500,000 to be drawn on the account and made payable to Capital Partners, another company he owned.

He endorsed those checks and deposited the proceeds into his own checking account, FINRA said.

The self-regulator filed a complaint against Lee but he failed to respond, leading to a “default decision” by FINRA.

FINRA also filed a complaint against Gary Ray Fournier in Rolling Hills, Calif., a former registered representative at UBS Financial Services Inc., alleging he engaged in unsuitable and excessive trading in municipal bonds in the brokerage accounts of customers.

The complaint also claims Fournier failed to follow his customers’ investment objectives.

The customers lost about $1.2 million while Fournier and the firm earned about $875,000 in compensation from markups and markdowns, FINRA said.

The complaint alleges Fournier violated the MSRB’s Rule G-17 on fair dealing and G-19 on suitability. FINRA enforcement lawyers asked hearing officers to force Fournier to disgorge any ill-gotten gains, plus interest.

They also requested that he be forced to pay for costs of the proceeding.

In addition, FINRA fined Matthew David Osborn — a registered representative in Yreka, Calif., who formerly worked at Edward Jones — $5,000 and suspended him from associating with any FINRA member for 10 business days last month after he purchased municipal securities for a customer without authorization and in violation of the procedures of Edward Jones.

According to FINRA, Edward Jones prohibits discretionary accounts.

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