Wells Fargo Advisors, with $1.4 trillion in client assets, this week appointed Jim McHale as chief compliance officer. He will report to Bob Mooney, chief compliance officer of Wealth, Brokerage and Retirement.

McHale, who will serve on the firm’s operating committee, most recently held positions as global head of brokerage compliance at E*TRADE Financial, and associate general counsel for the Securities Industry and Financial Markets Association (SIFMA). While at E*TRADE, McHale helped design and implement an enterprise compliance program consistent with the expectations of the federal banking regulators.  At SIFMA, he worked closely with SIFMA member firms, led the development of industry positions on key regulatory and compliance issues and guided the preparation of SIFMA’s comment letters on proposed rules and regulations.

In his new role, McHale will be responsible for leading the compliance function for WFA’s retail brokerage business, including oversight of products and regulatory compliance, internal controls, anti-money laundering, regulatory change management, and regulatory affairs.

Enforcement Action

As Compliance Week previously reported, the Securities and Exchange Commission in October instituted an administrative proceeding against Judy Wolf, former compliance officer for Wells Fargo Advisors, for allegedly altering a document before it was provided to the SEC during an investigation. Wolf 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.

After Wells Fargo provided the document to the SEC as part of its investigation, SEC enforcement staff spotted the alteration and questioned Wolf specifically about the document.  At first she unequivocally denied altering the document after September 2010, but in later testimony she testified that she had done so, the SEC stated.

The SEC previously charged Wells Fargo in September 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.

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