Wells Fargo Advisors Steer Retired Naples Couple to High Risk Products and Steep Losses

Wells Fargo Advisors committed financial wrongdoing that resulted in significant losses to the retirement nest egg of a Naples couple, according to a claim filed with the Financial Industry Regulatory Authority by Vernon Litigation Group, a national investor advocacy law firm.

The claim asserts that advisors for Wells Fargo took the bulk of the retired couple’s conservative investments and replaced them with much riskier investments — some of them Wachovia Securities products — that were unsuitable for the couple’s age and risk averseness. The much riskier investments were not in line with the couple’s main goal: to protect their retirement nest egg.

Following long professional careers, the couple looked forward to what they believed would be a comfortable retirement. Most of their investments were in low-risk mutual funds. However, as the economy began to decline in late 2007, the couple sought what they thought would be professional investment advice from the then Wachovia Securities, now Wells Fargo Advisors.

The couple made it clear that protecting their irreplaceable nest egg was their top priority. Despite the demand for a conservative approach, Wells Fargo advisors immediately sold the couple’s secure investments that were reaping reasonable returns, causing immediate losses to their portfolio due to the market’s fall.

The advisors then placed much of the couple’s nest egg in risky products, many of them from the financial sector, including Wachovia products, which led to significant losses for the couple in a matter of a few months.  For example, Wells Fargo Advisors recommended and sold the retired couple General Motors notes just two months after GM had reported operating losses of $39 billion. Wells Fargo Advisors further jeopardized the couple’s retirement future by recommending an interest-only mortgage for their home rather than paying cash for it. The interest-only mortgage further encumbered the couple’s principal investment because the loan required them to keep a collateral account open with a minimum balance of more than $720,000 and relinquish control of it to Wells Fargo Advisors.

Over the course of just 10 months, Wells Fargo Advisors effectively tripled the amount of exposure the retired couple had to the volatility of the market and caused irreparable losses to their retirement nest egg, according to the claim that seeks at least $400,000 in damages.

Vernon Litigation Group is a Naples, Florida-based law firm that represents investors nationwide who are victims of securities fraud, stock fraud, and stock losses due to broker fraud and brokerage fraud. Vernon Litigation Group attorneys have decades of experience in securities arbitration and litigation matters. The firm assists clients in attempting to recover losses caused by all manner of financial fraud and negligence. Vernon Litigation Group focuses its practice on complex financial litigation and arbitration as well as business and commercial litigation.

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