Two former Wachovia Securities LLC brokers, Eddie W. Sawyers and William K. Harrison, have been charged by the Securities and Exchange Commission with six counts of securities fraud. The two men, who previously operated Harrison/Sawyers Financial Services, are accused of defrauding at least 42 elderly investors of their retirement savings, which resulted in some $8 million in financial losses. The SEC is seeking a permanent injunction against the two men and their representatives from further violations of securities regulations, as well as the repayment of the funds (with interest) and civil penalties.
Per the SEC, between December 2007 and October 2008, Sawyers and Harrison, who are related by marriage, pitched investments with Harrison/Sawyers Financial Services to Wachovia clients. They claimed the investments were “foolproof,” a “sure thing,” and an opportunity to make a 35% without risking their principal investment. This was not, however, the case. One couple, who Sawyers convinced that they should invest $100,000 later discovered that only $16,000 remained in their account.
The SEC claims that the two men solicited unsophisticated clients who were heavily invested in equities and mutual funds and had a conservative investment approach. Sawyers and Harrison also transferred assets to online options-trading accounts under their control.
While some online optionsXpress accounts were set up in clients’ names, others were in accounts under the name of Harrison’s spouse Deana or under both both their names. Clients did not receive statements from the group.
After getting a client’s signature on a blank-trading authorization form, Deanna Harrison would then be appointed the client’s power of attorney and agent for the accounts. In 2008, Sawyers and Harrison allegedly took out $234,000 from three client accounts as compensation for their services.
The SEC says that in a resignation letter to Wachovia, Harrison confessed to misdirecting about $6.6 million from 17 Wachovia clients to trade online. He also admitted that he ran the online trading without getting the authorization of Wachovia or the investors.
Wachovia says that the minute they discovered the alleged securities fraud, it notified its primarily regulator, cooperated with regulators and law enforcement, and took proactive steps to give clients that were impacted full restitution.
Related Web Resources:
Former Wachovia brokers charged with defrauding elderly customers in Surry, losing $8 million, Winston-Salem Journal, December 17, 2010
SEC accuses 2 NC brokers of defrauding clients, Bloomberg/AP, December 16, 2010
Wachovia, Stockbroker Fraud Blog
Institutional Investor Securities Blog