A Wells Fargo & Co. (WFC) brokerage unit must buy back almost $94 million in auction rate securities from the family who said their adviser misrepresented the investments. The claimants are the relatives of deceased newsstand magnate Robert B. Cohen, who founded the chain Hudson News. Cohen died in 2012.
His family contends that Wells Fargo Advisors and one of its advisors made misleading and fraudulent statements about municipal auction-securities. They are alleging breach of fiduciary duty, negligence, and fraud in their municipal auction-rate securities fraud claim.
Now, the firm must buy back at face value the municipal ARS it helped Cohen, his family, and affiliated business purchase. The transactions started beginning March 2008.
(The FINRA arbitration panel, however, denied the Cohens punitive damages and compensation.)
Since the financial crisis that broke that year, Wells Fargo, Morgan Stanley (MS), Merrill Lynch (MER), UBS Wealth Management (UBS), Oppenheimer (OPY) and others have repurchased billions of dollars in auction-rate securities and consented to millions in fines to settle charges that they did not correctly supervise employees that provided investment advice, as well as failed to properly inform investors about the debt securities.
Many customers thought they were investing in securities that were liquid, like cash. They were therefore dismayed to discover that when the crisis hit and their auction-rate securities became frozen they could not access their money.
Our auction-rate securities fraud lawyers continue to help investors recoup their losses related to the financial crisis of 2008. Contact Shepherd Smith Edwards and Kantas, LTD LLP today.
Wells Fargo Unit (WFC) Ordered to Buy Back Auction-Rate Securities, The Wall Street Journal, December 27, 2013
Wells Fargo to repurchase $94M in securities from family clients, Investment News, December 27, 2013
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