FINRA Reportedly Bars Broker Scott Reed after Allegations of Selling Away
According to the Financial Industry Regulatory Authority (FINRA) today, the regulator has barred financial advisor Scott Wayne Reed (CRD #3007033) from the securities industry after he reportedly failed to provide information in FINRA’s investigation into circumstances of his termination from his member firm.
Scott Reed’s broker report indicates that he was registered with Wells Fargo Clearing Services in Scottsdale, AZ from 2016 until April 2020 when he was reportedly discharged after he “recommended and facilitated investment opportunities in investments sold away from and not offered by Wells Fargo Advisors.”
According to a Letter of Acceptance Waiver and Consent (AWC) signed on February 19, 2020, beginning in early 2019 Reed purportedly solicited at least six individuals, including at least two Wells Fargo customers, to invest in securities issued by a software and web development company based in Pasadena, California.
According to the AWC, the securities were reportedly notes issued by the company to raise capital for its ongoing operations and for investors to profit from the repayments, which included a 15% rate of interest. Reed allegedly participated in at least $3.5 million in these investments away from the firm encouraging them to invest, according to FINRA.
Reed apparently helped the investors send or receive transfers of funds and in one case, he allegedly offered to personally guarantee half of an individual’s investment, according to the AWC. He reportedly received selling compensation of $191,340 from the company for his role in soliciting and facilitating the investments, according to the letter of acceptance. Reed also purportedly invested over $200,000 of his own money in the company, according to the AWC.
After his alleged dismissal, Reed was briefly affiliated with First Financial Equity Corp. until December 2020, according to his broker record. He has three customer lawsuits filed against him, with one still pending, for allegations of misrepresentation and unsuitable investments, among others.
When a FINRA registered representative conducts business outside the scope of the brokerage firm where they are registered, the act can be considered “selling away.”
Some brokers, looking to supplement their income, will go outside the traditional market, trying to find other products to push.
If a registered broker “sells away” from their firm, the brokerage firm may still be liable for negligent supervision of their broker representative and may be responsible for investment losses in a FINRA dispute resolution claim.
For FINRA’s full findings see FINRA Case NO. 2020066246901.
Filing a Complaint against your Brokerage Firm
The White Law Group is investigating potential securities fraud claims involving Scott Reed and the liability his former employer, Wells Fargo, may have for failing to properly supervise him.
Brokerage firms are required to adequately supervise their advisors. They must ensure they are complying with FINRA rules.
When brokers abuse client accounts and conduct transactions that violate securities laws, the brokerage firm they are working with may be liable for investment losses. Brokerage firms that fail to monitor the business activities of their employees may be liable for investment losses due to negligent supervision for the misconduct of their employees.
If you are concerned about investments with Scott Reed and Wells Fargo, the securities attorneys at The White Law Group may be able to help you. Please call 888-637-5510 for a free consultation, or visit us on the web at www.whitesecuritieslaw.com.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois.