The Securities and Exchange Commission (SEC) filed a lawsuit against a former compliance officer at Wells Fargo Advisors for allegedly altering a document before submitting it to the regulator during an investigation.
SEC allegations against Wells Fargo Advisors
The SEC filed public administrative and cease-and desist proceedings against Judy Wolf, a former compliance officer at Wells Fargo Advisors for violating the record-keeping requirements of the Exchange Acts and the record production.
As compliance officer at Wells Fargo Advisors, Wolf was responsible for identifying potentially suspicious trading by the firm’s staff, customers or clients. She was also responsible for analyzing whether the trades may have been based on material non-public information.
In September 2010, Wolf created a document summarizing her evaluation of a particular Well Fargo broker’s trading. She concluded her review with no findings. According to the SEC, Wolf altered that document after the commission charged Wells Fargo Advisors with insider trading on December 2012.
According to the commission, Wolf amended the document to show that she conducted a more thorough review than she actually did in 2010. The altered document was submitted to the SEC as part of its continuing investigation against the firm.
The SEC enforcement staff noticed the change in the document and questioned Wolf because she provided information regarding his review of the trading. The commission found that Wolf altered a document related to her look back review of trading for the shares of Burger King Worldwide Inc (NYSE:BKW).
The SEC emphasized that Wolf initially denied altering the document, but he admitted her action during a later testimony.
“We allege that Wolf intentionally altered a trading review document after she knew that the SEC had charged a Wells Fargo employee with insider trading based on facts related to her review,” said Daniel M. Hawke, chief, market abuse unit of the enforcement division of SEC.
Hawke added, “Regardless of her motivation, her conduct was inconsistent with what the SEC expects of compliance professionals and what the law requires.”
The SEC Enforcement Division alleged that Wolf willfully aided, abetted and caused Wells Fargo Advisors to violate section 17 (a) of the Securities Exchange Act of 1934 and rules 17a(j) and rule 204 (a) of the Investment Advisers Act of 1940.
Wells Fargo Advisors paid $5 million penalty
According to the SEC, Wells Fargo Advisors placed Wolf under administrative leave and eventually terminated her employment before the enforcement action.
The commission previously filed a complaint against the firm, and agreed to pay $5 million to settle the case and other violations of the securities laws.