A former customer of Scott Reed, an ex-Wells Fargo Clearing Services broker, has filed a FINRA arbitration claim. The investor claims Reed made them invest more than $2M in unapproved investments. This resulted in the broker making hundreds of thousands of dollars in undisclosed commissions.
FINRA barred Scott Reed in February 2021 for allegedly taking part in $3.5M of private securities transactions. These transactions were made without notifying or getting the approval of his member firm first. This practice is known as selling away.
The self-regulatory organization (SRO) said that Reed solicited individuals to invest in securities from a software and development company. Not only did he facilitate these sales, but he also personally invested $200K in the company.
He was paid by the latter in over $191K in selling compensation. The ex-Wells Fargo broker settled FINRA’s case without denying or admitting to the allegations.
FINRA’s bar of Scott Reed came almost a year after Wells Fargo allowed him to resign. He then spent a few months in 2020 as a First Financial Equity registered representative. Reed’s Broker Check record notes that an investigation by the Arizona Corporation Commission remains pending.
Brokers Can Earn Higher Commissions As a Result of Selling Away
Selling away is a violation of securities laws and is known for placing investors at risk. This is because the brokerage firm has not carried out the proper due diligence to determine whether the investments were legitimate and safe.
Selling away allows a broker the opportunity to engage in securities fraud and misconduct. Unfortunately, larger commissions can compel a registered representative to participate in unauthorized transactions.
Scott Reed worked 21 years in the industry. He also used to be a registered representative with Coastal Equities, Accelerated Capital Group, and Ameritrade, to name a few.
A 2017 investor who accused Reed of unsuitability and failing to diversify the claimant’s portfolio received a $15K settlement. Another unsuitability claim from 2010 was denied.
Skilled Securities Fraud Lawyers
Shepherd Smith Edwards and Kantas (SSEK Law Firm at investorlawyers.com) is speaking with clients of ex-Wells Fargo registered representative, Scott Reed to help them determine whether they have grounds for a securities claim.
If you believe you’ve been a victim of selling away or securities fraud, call us at (800) 259-9010 today.