Silver Law Group has filed a FINRA dispute resolution claim against Wells Fargo and one of its brokers on behalf of a client who lost over $1,000,000 as a result of bad real estate investment advice he received from his broker.
Silver Law Group has filed arbitration claims against Wells Fargo. If you have investment losses, contact us today for a no-cost consultation at 855-755-4799.
Our client, who I’ll call “Abe” to protect his privacy, is a physician living in Southern California. After opening an account with Wells Fargo in 2014, Abe became interested in real estate investing and created an LLC to own, operate, and develop real estate. Abe’s LLC also held investment accounts with Wells Fargo.
In 2015, Abe met a real estate broker and asked him to find properties that could generate a return on his investment. Abe’s real estate broker and his Wells Fargo broker began working to find properties for him to invest in.
Wells Fargo Broker Allegedly Puts Own Interest Above Client’s
Several potential properties were discussed, and Abe was especially interested in buying a property in California. However, Abe’s Wells Fargo broker and the real estate broker strongly recommended a property in Manhattan, New York, telling him that the property was a “gold mine”, significantly undervalued, and that the buyer was under pressure to sell immediately.
Abe was not told that his Wells Fargo broker stood to gain a considerable referral fee if he purchased the Manhattan property. Though he liked the California property more, he purchased the Manhattan property on the advice of his broker.
Abe ultimately lost more than $1,000,000 on the Manhattan property. His Wells Fargo broker acted in his own financial interest and to the detriment of his.
FINRA has sanctioned many financial advisors for encouraging investors to put money into real estate projects sponsored or recommended by the financial advisor or stockbroker. Investors should be skeptical of stockbrokers selling real estate or other investments which they are actively involved in. If a stockbroker urges an investor to not contact his manager or supervisor, it could be a red flag that the advisor is acting inappropriately. Other real estate investments can be high commissions or high fees for the brokerage firm but are risky and illiquid for the investor. Many brokerage firms have allegedly sold risky unsuitable REITS.
FINRA Arbitration Claim
Abe hired Silver Law Group to attempt to recover his money. We filed a statement of claim before FINRA dispute resolution. Customers of any FINRA-registered firm such as Wells Fargo are required to resolve disputes through FINRA’s arbitration process. Arbitration panels can award plaintiffs anything a court can, but the process is typically cheaper and faster than going to court.
Our statement of claim alleges that Wells Fargo and its broker (Respondents) breached the fiduciary duty they owed to Abe and his investment company (Claimants). Negligence and gross negligence, breach of contract, and failure to supervise are also alleged.
The claim states “Wells Fargo’s failure to supervise (redacted broker) and allow him to recommend the Manhattan property constituted a breach of that duty to Claimants. The losses suffered by Claimants were a direct and proximate result of following Respondents’ negligent investment advice, failure to supervise, and failure to warn Claimants of (redacted broker’s) relationship with (redacted realtor).”
Selling Away And Bad Real Estate Advice From Brokers
The conduct Abe’s broker is alleged to have committed could be considered selling away, which is when a broker conducts a private transaction that was not approved by the firm they are registered with. Abe’s situation, involving a trusted broker giving real estate advice to a client that benefits the broker and hurts the client, is not unheard of.
In cases of selling away, broker-dealers are still responsible for customer losses because of their duty to supervise their brokers and prevent such activity.
FINRA has sanctioned many financial advisors for encouraging investors to put money into real estate projects sponsored or recommended by the financial advisor or stockbroker. Investors should be skeptical of stockbrokers selling real estate or other investments which they are actively involved in. If a stockbroker urges an investor to not contact his manager, it could be a red flag that the advisor is acting improperly. Other real estate investments can be high commissions or fees for the brokerage firm but are risky and illiquid for the investor. Many brokerage firms have allegedly sold risky unsuitable REITS.
Do You Have Real Estate Losses From Bad Broker Advice?
If you or someone you know lost money after receiving bad advice from a broker with Wells Fargo broker or another firm, please contact the Silver Law Group toll free at (800)-975-4345 or e-mail firstname.lastname@example.org for a no-cost confidential consultation. Our attorneys have extensive experience representing investors with losses related to selling away, breach of fiduciary duty, and other causes, and represent investors in California and nationwide.