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Former Wells Officer Charged and Fired for Covering Up Insider Trading

Former Wells Officer Charged and Fired for Covering Up Insider Trading

The Securities and Exchange Commission (SEC) recently charged Judy Wolf, a former compliance officer at Wells Fargo Advisors, for improperly altering a document. The SEC alleges that Wolf altered a document before it was provided to the SEC during its investigation into a former broker’s inside trading.

Wells broker, Waldyr Da Silva Prado Neto, allegedly operated a scheme that made more than $2 million from insider trades in Burger King Holdings Inc. stock ahead of an acquisition announcement in Sept., 2010.

Wolf was responsible for identifying potentially suspicious trading activity at Wells Fargo Advisors. According to the SEC, she closed the report into Prado’s trades without recording any improprieties or notifying her superiors of potential red flags in the trades.

But after the SEC charged Prado in September, 2012, Wolf revised the report to make it appear that she had performed a more thorough review of Prado’s activities.

In its action, the SEC said Wolf should have reported many red flags, including that Prado and his clients, along with the company acquiring Burger King, were all Brazilian. Other red flags were that Prado and his clients:
• represented the top four positions in Burger King Securities,
• purchased the securities within 10 days of the announcement, and
• made substantial profits.

Wolf subsequently attempted to provide an additional reason for closing the review — that news articles had been circulated for several weeks prior to the announcement.

Wells Fargo admitted wrongdoing and paid the SEC $5 million to settle allegations that it failed to properly supervise Prado and submitted altered documents to SEC investigators.

According to the SEC, Wells Fargo placed Wolf on administrative leave in March 2013 and terminated her employment in June 2013. The SEC ordered Prado to pay $5.6 million, but he escaped to Brazil.

The team of investment fraud lawyers at Starr Austen & Miller LLP handles cases involving securities arbitration misrepresentation, overconcentration, broker fraud, negligence, broker churning, breach of trust, as well as malpractice.

Source: Investment News