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Scott Silver Weighs In On Investor’s Request To Revive Wells-Fargo Claim

Silver Law Group founder and managing partner Scott Silver recently commented on a case in which a former Wells Fargo customer requested to have an arbitration decision overturned because he felt that he was “improperly induced” into signing a release agreement prior to seeking arbitration.
“This case highlights the way big brokerage firms clean up situations with bad brokers by protecting themselves instead of protecting their customers and advising them of significant misconduct,”  Scott said in an email to AdvisorHub
The case stems from a former Wells Fargo broker, Scott Wayne Reed (CRD# 3007033), of Scottsdale, AZ, who persuaded his brokerage customers into investing in a private software company without the firm’s approval, known as “selling away.”  The now-defunct entity, called Pebblekick, was a streaming company based in Pasadena, CA. Reed solicited six investors, invested $200,000 of his own funds into the company, and received a commission of $191,340 for his work recruiting six new investors. As a result, FINRA barred Reed from the industry in 2021.
Kenneth Grover, the client, originally signed an agreement with Wells Fargo that would forgive his margin call debt with the firm after his broker, Reed, was barred. Grover’s signing of the release agreement in exchange for the debt forgiveness also dismissed any other claim he might have against the wirehouse.Silver Law Group founder and managing partner Scott Silver recently commented on a case in which a former Wells Fargo customer requested to have an arbitration decision overturned because he felt that he was “improperly induced” into signing a release agreement prior to seeking arbitration.

“This case highlights the way big brokerage firms clean up situations with bad brokers by protecting themselves instead of protecting their customers and advising them of significant misconduct,”  Scott said in an email to AdvisorHub

The case stems from a former Wells Fargo broker, Scott Wayne Reed (CRD# 3007033), of Scottsdale, AZ, who persuaded his brokerage customers into investing in a private software company without the firm’s approval, known as “selling away.”  The now-defunct entity, called Pebblekick, was a streaming company based in Pasadena, CA. Reed solicited six investors, invested $200,000 of his own funds into the company, and received a commission of $191,340 for his work recruiting six new investors. As a result, FINRA barred Reed from the industry in 2021.

Kenneth Grover, the client, originally signed an agreement with Wells Fargo that would forgive his margin call debt with the firm after his broker, Reed, was barred. Grover’s signing of the release agreement in exchange for the debt forgiveness also dismissed any other claim he might have against the wirehouse.

Because Grover felt he was “improperly induced” to sign the release agreement to release Wells Fargo from any other claims, a FINRA arbitration panel dismissed his $2.5 million claim and did not allow him to testify. Grover is now asking a court to overturn the ruling of the arbitration panel and its decision to refuse his testimony, stating in the suit that the panel overstepped its authority with these actions.

Additionally, Wells Fargo was fully aware of Reed’s other violations, including Pebblekick, which would likely lead to additional client arbitrations and lawsuits. When Grover signed the release, he was unaware of the rest of Reed’s misconduct.

“Faced with an overwhelming amount of proof and knowledge of Reed’s misconduct regarding Ken, Wells Fargo hatched a plan to protect itself and its own pocketbook at Ken’s expense,” Grover alleged in his complaint. By convincing Grover and others to sign these agreements, Wells Fargo may have escaped additional sanctions from Reed’s actions.

Reed was allowed to voluntarily resign from Wells Fargo on 4/7/2020 for allegations of recommending investments that were not approved by the firm. Following Wells Fargo’s submission of Reed’s Form U5 post-termination, FINRA began its investigation.

In 2022, the SEC charged Pebblekick and two other individuals with raising $17 million through fraudulent sales of unregistered securities and misappropriation of much of the raised funds.

Did You Invest With Kenneth Grover At Wells Fargo? 

Silver Law Group represents investors in securities and investment fraud cases. Our lawyers are admitted to practice in New York and Florida and represent investors nationwide to help recover investment losses due to stockbroker misconduct. If you have any questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases are handled on a contingent fee basis, meaning that you won’t owe us until we recover your money for you. Contact us today at (800) 975-4345 and let us know how we can help.

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