Wells Fargo Fires Energy-Touting Broker with Barrage of Customer Complaints
Wells Fargo has fired a broker in southern California who has racked up 24 complaints of negligently concentrating customers in high-risk energy stocks in the past 18 months but continues to employ his partner.
Charles B. Lynch, Jr., was discharged on April 12 for “loss of management confidence,” according to Wells Fargo Advisors’ U-5 filing with regulators. His younger partner, Charles Frieda, who was named in 23 complaints, remains at a Wells Advisors office in Irvine, based in affluent Orange County.
The slew of arbitration complaints against Wells and the brokers have to date resulted in awards of $1.9 million, according to Finra’s BrokerCheck database.
Lynch, 39, could not be reached for comment. Frieda, 33, said he could not discuss the claims, and a Wells Fargo Advisors spokesman declined to elaborate.
Many of Lynch’s clients were put into fee-based wrap accounts between 2012 and 2016. Their portfolios were concentrated in high-risk oil and gas company stocks that tanked in 2014 and 2015, according to the U-5 document filed with regulators.
At least six customer complaints allege that the brokers put as much as 70% of their portfolios in “speculative energy stocks.”
Jonathan Kurta, a lawyer in New York representing a married couple seeking $300,000 from the pair, said they are alleging unsuitable recommendations given his clients’ ages, misrepresentations and negligence, along with over-concentrated positions.
Among the stocks recommended by Frieda and Lynch were oil-and-gas exploration companies Magnum Hunter Resources and Halcon Resources Corp, according to Kurta. Shares of Magnum were delisted from the New York Stock Exchange in November 2015 after falling to 15 cents from almost $9 two years earlier. Halcon shares have tumbled from more than $35 a share in June 2014 to 98 cents in late April.
The complaint against Wells Fargo alleges that the firm failed to supervise. Kurta believed that the firm should have reviewed why so many retirement-aged clients were so heavily concentrated in a single sector.
On his Wells Fargo website, Frieda, a certified financial planner, describes himself as a trusted Financial Advisor. “I strive to work with my clients to maintain a balance between navigating the various markets cycles, sustaining their income needs, and at the same time maintaining a focus on their long-term goals,” it says.