An elderly client Wells Fargo filed a claim requesting arbitrators award damages of over $100,000 for what he alleges are losses incurred as the result of Wells Fargo's failure to conduct adequate due diligence related to investments in a F-Squared Investments Inc. product. F-Squared Investments Inc.already agreed with the SEC to settle charges it made false claims regarding the product's performance.
According to the complaint, the 68-year-old Wells Fargo client believes Wells Fargo failed to properly supervise one of its advisers and recommendations the adviser made to the client, who described himself as a "moderately conservative investor seeking moderately conservative growth" when it comes to investment risk.
The customer claims that his adviser placed a great majority of the invested savings—about $900k—in F-Squared's AlphaSector Allocator Select and Good Harbor Financial's US Tactical Core.
The AlphaSector Allocator Select product, for instance, invests in the complex exchange-traded funds (ETFs) product. ETFs are generally riskier than traditional securities.
The claim states that by earning $19,000 in fees for recommending the ETF-based portfolio products, Wells Fargo placed itself in a high commission situation that created a conflict of interest.
The widower client argues that had Wells Fargo conducted full due diligence on the F-Squared product, it would have discovered red flags, additionally seeing that the ETF-based F-Squared product was not appropriate for a "moderately conservative investor."
In December 2014,F-Squared agreed to pay $35 million in a settlement related to a case in which F-Squared was accused of making false claims about the performance of its investment product.
If you have invested with Wells Fargo or with any other firm whose broker or financial adviser's improper recommendations, such as ETFs or other complex products unsuitable for your investment objectives and risk tolerance, or those posing a conflict of interest, and this failure to put the investor's interests first has proven harmful to your investments or financial position, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for investigation and consultation.