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FINRA Bars Former Wells Fargo Broker for Private Securities Transactions

The regulatory agency claimed Scott Wayne Reed failed to get approval from Wells Fargo when soliciting clients to invest in a software company he himself was invested in.

FINRA has barred a former broker previously associated with Wells Fargo, claiming he urged clients to invest millions into a company he was personally invested in while failing to alert his employer.

Starting in early 2019, Scott Wayne Reed began soliciting at least six investors, including two Wells Fargo customers, enticing them to invest in securities that had been issued by a Pasadena, Calif.–based software and web development company, according to FINRA.

The regulatory agency’s letter stated that the software company claimed the securities were being issued to raise capital to fund ongoing operations and so investors could profit on repayments, which were set to include a 15% rate of interest. In all, Reed helped facilitate at least “$3.5 million in investments away from the firm by providing written materials about the company to investors, and by communicating with them orally, by email and text message about the company and encouraging them to invest,” according to the letter.

Reed also facilitated transactions by helping investors send or receive fund transfers, even going so far as to personally guarantee half of one client’s investment in the software company’s securities, according to FINRA. In doing so, Reed got “selling compensation” totaling $191,340 from the unnamed company, and Reed himself invested more than $200,000 of his own money into the company.

But according to FINRA, Reed did this all without alerting Wells Fargo or obtaining the approval for the securities transactions that were conducted outside of the firm. On Apr. 17 of last year, Wells Fargo informed FINRA of Reed’s “voluntary termination” from the firm, based on an investigation into the allegations against him. After leaving Wells Fargo, Reed worked at First Financial Equity Corporation through the end of 2020 but is not currently affiliated with any FINRA-registered firm, according to his BrokerCheck profile. His BrokerCheck history also includes a pending customer dispute from Dec. 2017, in which customers sought $300,000, arguing that Reed “recommended unsuitable investments and did not diversify their retirement portfolio” (this complaint stems from Reed’s work with Coastal Equities, a different associated firm). 

A Wells Fargo spokesperson declined to comment, and Reed's counsel did not return a request for comment as of press time.

Reed joined Wells Fargo Clearing Services in 2016 and was based out of Scottsdale, Ariz., according to FINRA’s letter of acceptance, waiver and consent. (According to his BrokerCheck profile, Reed’s previous work history included nearly a decade at Fidelity.)

Reed signed the FINRA settlement letter on Feb. 14; in it, the regulatory agency barred him from “associating with any FINRA member in all capacities.” 

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