Rules are rules, says the SEC
16 October 2014 Washington DC
Image: Shutterstock
The Securities and Exchange Commission (SEC) has engaged in enforcement action against a former Wells Fargo Advisors compliance officer who allegedly altered a document before it was provided to the SEC during an investigation.
According to the SEC’s order instituting an administrative proceeding against Judy Wolf, she was responsible for identifying potentially suspicious trading by Wells Fargo personnel or the firm’s customers and clients and then analysing whether the trades may have been based on material nonpublic information.
Wolf created a document in September 2010 to summarise her review of a particular Wells Fargo broker’s trading, and she closed her review with no findings.
The SEC Enforcement Division alleges that Wolf altered that document in December 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, according to the SEC.
After Wells Fargo provided the document to the SEC as part of its continuing 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 previously charged Wells Fargo in the case, and the firm agreed to pay $5 million to settle these and other violations of the securities laws.
Prior to the enforcement action, Wells Fargo placed Wolf on administrative leave and ultimately terminated her employment.
“We allege that Wolf intentionally altered a trading review document after she knew that the SEC had charged a Wells Fargo employee with insider trading based on facts related to her review,” said Daniel Hawke, chief of the SEC Enforcement Division’s Market Abuse Unit.
“Regardless of her motivation, her conduct was inconsistent with what the SEC expects of compliance professionals and what the law requires.”
According to the SEC’s order instituting an administrative proceeding against Judy Wolf, she was responsible for identifying potentially suspicious trading by Wells Fargo personnel or the firm’s customers and clients and then analysing whether the trades may have been based on material nonpublic information.
Wolf created a document in September 2010 to summarise her review of a particular Wells Fargo broker’s trading, and she closed her review with no findings.
The SEC Enforcement Division alleges that Wolf altered that document in December 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, according to the SEC.
After Wells Fargo provided the document to the SEC as part of its continuing 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 previously charged Wells Fargo in the case, and the firm agreed to pay $5 million to settle these and other violations of the securities laws.
Prior to the enforcement action, Wells Fargo placed Wolf on administrative leave and ultimately terminated her employment.
“We allege that Wolf intentionally altered a trading review document after she knew that the SEC had charged a Wells Fargo employee with insider trading based on facts related to her review,” said Daniel Hawke, chief of the SEC Enforcement Division’s Market Abuse Unit.
“Regardless of her motivation, her conduct was inconsistent with what the SEC expects of compliance professionals and what the law requires.”
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