The Financial Industry Regulatory Authority (FINRA) barred broker Alfred Chi Chen of Antelope, California for engaging in unauthorized transactions and making unsuitable recommendations to customers to purchase reverse convertible instruments.
Specifically, FINRA found that while Chen was registered with Wells Fargo Investments, LLC in 2008, engaged in unauthorized trading activity in three investment accounts, including two inactive accounts whose owners were deceased at the time of Chen's actions. As for the third, that account's owner had specifically instructed Chen not to engage in any transactions.
Instead, Chen had emptied that third account entirely, using all of the customer's cash to purchase nearly $75,000 worth of reverse convertible notes.
FINRA found that from 2006-2008, Chen recommended unsuitable reverse convertible note transactions for 23 additional customers: These recommendations were improper as Chen selected inexperienced investors, including fraudulently changing the risk tolerance of some investors from "low" to "medium" so that Wells Fargo would approve Chen's higher-risk reverse convertible transactions. 22 of the 23 affected customers were at least 65 years of age, while many of these elderly investors were over 80 years old.
Unfortunately yet precisely because Chen artificially manufactured increased activity in the reverse convertibles market, he was promoted and given the title of Wells Fargo Investments' Vice President and Senior Financial Consultant in April 2007.
In 2010, Jonathan W. Evans won an arbitration claim against Wells Fargo for the unsuitable sale of reverse convertible securities to a senior citizen. The award, Finra Case No. 09-00339 is available on FINRA's website.
If you invested with Alfred Chi Chen, Wells Fargo Investments or with any broker or firm who you suspect has engaged in financial misconduct that has proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.