A former compliance officer of Wells Fargo Advisors who faced an enforcement action by the Securities and Exchange Commission last year for allegedly altering a document before it was provided to the SEC during an investigation has won dismissal of her case.
As Compliance Week previously reported, the SEC instituted an administrative proceeding against Judy Wolf, former compliance officer for Wells Fargo Advisors, who was responsible for identifying potentially suspicious trading by Wells Fargo personnel, or the firm’s customers and clients, and then analyzing whether the trades may have been based on material nonpublic information.
According to the SEC, Wolf created a document in 2010 to summarize her review of a particular Wells Fargo broker’s trading and closed her review with no findings. The SEC Enforcement Division alleged that Wolf altered that document in 2012 after the SEC charged the broker with insider trading. “By altering the document, Wolf made it appear that she performed a more thorough review in 2010 than she actually had,” the SEC stated.
Administrative Law Judge Cameron Elliot said in her ruling on Aug. 5 that “by sanctioning only Wolf…the rest of the securities industry could view this proceeding as proof that Wolf’s violation was isolated and non-systemic.”
“If Wolf is sanctioned, there is a likelihood that others in the industry will perceive Wolf as simply a bad apple, a low status worker who unilaterally caused Wells Fargo to violate the law, and will see no need to examine their own practices and corporate cultures,” Elliot said in her ruling. “Wells Fargo clearly had much deeper and more systemic problems than one bad apple.”
The SEC charged Wells Fargo last year with failing to maintain adequate controls to prevent Wolf from insider trading based on a customer’s nonpublic information. The SEC also charged Wells Fargo for unreasonably delaying its production of documents during the SEC’s investigation and providing an altered internal document related to a compliance review of the broker’s trading.
Wells Fargo, which admitted wrongdoing, agreed to pay $5 million to settle the charges. Prior to the enforcement action, Wells Fargo placed Wolf on administrative leave and ultimately terminated her employment.