Securities Arbitration Lawyers BlogFINRA Bars Broker Scott Reed Following Allegations of “Selling Away”
Scott Reed (Scott Wayne Reed CRD# 3007033) is a previously registered broker and investment advisor whose most recent employer was First Financial Equity Corporation (CRD#: 16507). Prior to that, Reed spent four years at Wells Fargo Clearing Services, LLC (CRD#: 19616) in Scottsdale, Arizona. Reed has been in the securities industry since 1999.
FINRA And Arizona Corporation Commission Investigate Scott Reed
After learning of allegations concerning Reed following his termination from Wells Fargo, the Financial Industry Regulatory Authority (FINRA) began an investigation into Reed’s conduct. Among other things, FINRA made the following findings of fact:
- Reed solicited individuals to invest in securities issued by a software and web development company based in Pasadena, California;
- Reed received selling compensation of $191,340 from the company for his role in soliciting and facilitating the investments; and
- Reed failed to provide Wells Fargo with prior notice or obtain the firm’s advance approval for his participation in these private securities transactions.
According the FINRA’s Letter of Acceptance, Waiver and Consent with Reed, this conduct constituted a violation of FINRA Rules. Accordingly, Reed consented to a permanent bar from the brokerage industry.
Additionally, the Arizona Corporation Commission also has a pending investigation against Reed for similar allegations. Reed’s CRD Report, published by FINRA, indicates that the allegations involved in the Arizona investigation include “[s]elling away, sale of unregistered securities, [and] fraud . . .”
Reed Resigned from Wells Fargo Amid Allegations Of Selling Away Securities
Reed’s CRD Report also indicates that Reed voluntarily terminated his employment with Wells Fargo in April 2020 following allegations that he “recommended and facilitated investment opportunities in investments sold away from and not offered by Wells Fargo Advisors.”
Selling Away May Be Grounds For Securities Arbitration Claim
Brokers typically offer a range of securities and investments to clients which are vetted and approved by their employing firm. These products have been thoroughly researched and given due diligence by the broker’s company, and are identified as suitable for clients.
When a broker offers a client something that wasn’t approved by the brokerage firm, he or she may be selling something that has not been through adequate vetting and due diligence. This increases the possibility of purchasing something with much higher risk, including loss of the entire investment. Selling unapproved investments is referred to in the industry as “selling away”.
FINRA Rule 3040 prohibits “selling away” unless the broker obtains specific permission by the firm to do so. Moreover, a brokerage firm may be liable to investors who suffer losses due to improper selling away.
Did You Lose Money Investing With Scott Reed And/Or Wells Fargo?
Silver Law Group represents investors in securities and investment fraud cases. Our lawyers are admitted to represent investors nationwide to help recover investment losses due to stockbroker misconduct, including selling away. If you have any questions about your investments, call to speak with an experienced securities attorney. Most cases are handled on a contingency fee basis, meaning that you won’t owe us until we recover your money for you. Contact us today and let us know how we can help.