In the Matter of Wells Fargo Brokerage Services, LLC, et al.
Admin. Proc. File No. 3-14982
On August 14, 2012, the Commission instituted and simultaneously settled administrative and cease-and-desist proceedings (the “Order”) against Wells Fargo Brokerage Services, LLC n/k/a Wells Fargo Securities, LLC (“Wells Fargo”) and Shawn Patrick McMurtry (“McMurtry”) (collectively, the “Respondents”). In the Order, the Commission found that, from at least January 1, 2007 through August 14, 2007, Wells Fargo recommended and sold asset backed commercial paper (“ABCP”), which was issued by one of the following three structured investment vehicle or “SIV” entities: Rhinebridge PLC; Mainsail II Ltd.; or Golden Key Ltd. to certain institutional customers. Wells Fargo used registered representatives, including McMurtry, to recommend and sell these ABCP’s to customers. The Respondents violated the federal securities laws when they recommended and sold ABCP to customers without obtaining sufficient information and understanding about the nature and risks of the ABCP. According to the Order, the Respondents did not review the private placement memoranda for the ABCP and the extensive risk disclosures in those documents. The Commission ordered the Respondents to pay a total of $6,606,571.96 in disgorgement, prejudgment interest, and civil money penalties to the Commission. The Commission also created a Fair Fund (“Fair Fund”), pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, as amended, so that the penalties, along with the disgorgement and interest, could be distributed to those harmed by the Respondents’ conduct described in the Order. See the Commission’s Order Release No. 33-9349.
The Respondents have paid a total of $6,606,693.17 into the Fair Fund for distribution to harmed investors.
On July 2, 2013, the Commission issued an order appointing Michael J. Liccar and Company, LLC as the Fund Administrator of the Fair Fund and set the administrator’s bond amount. See the Commission’s order Release No. 34-69917.
On January 27, 2017, the Commission published a notice of the proposed plan of distribution and opportunity for comment and simultaneously published the proposed plan of distribution (“Proposed Plan”). The notice provided the public with 30 days to submit their comments on the Proposed Plan. See the Commission’s notice: Release No. 34-34-79888 and the Proposed Plan.
On March 23, 2017, the Commission issued an order approving the plan of distribution and published the approved plan of distribution (“Plan”). See the Commission’s order: Release No. 34-80302 and the Plan.
The Plan provides that the distribution of the Fair Fund shall be made in accordance with the methodology detailed in Section V of the Plan to the ten (10) customers harmed by the Respondents’ conduct.
On March 21, 2019, the Commission issued an order approving the disbursement of $6,604,693.16 from the Fair Fund for distribution to eligible investors. See the Commission’s Order: Release No. 34-85384.
The final accounting in this matter has been approved and the distribution was closed on April 21, 2022, when the Commission issued an order transferring any remaining or future funds to the U.S. Treasury, discharging the Fund Administrator, canceling the Fund Administrator’s bond, and terminating the Fair Fund. See the Commission’s Order: Release No. 34-94768.