May 12, 2021
A former general securities representative, Scott Reed, recently consented to a bar from associating with member firms of the Financial Industry Regulatory Authority (FINRA) for allegedly participating in $3.5 million in private securities transactions without receiving prior written approval from his member firm at the time—Wells Fargo Clearing Services in Scottsdale, Arizona.
According to his FINRA BrokerCheck report, Reed was associated with Wells Fargo from April 2016 to April 2020. Reed voluntarily resigned after allegations arose that he recommended and facilitated investments not offered by Wells Fargo, a practice known as selling away. Shortly after the firm reported the allegations behind his resignation to FINRA Department of Enforcement, FINRA staff launched an investigation into the allegations. Reed was also briefly associated with First Financial Equity Corporation from December 2020 to April 2020.
FINRA asserts in the AWC that since Reed became associated with Wells Fargo, he was soliciting securities issued by a software and web development company based in Pasadena, California to at least six individuals, including two Wells Fargo customers. Reed allegedly sold $3.5 million in these investments that were not offered by Wells Fargo and helped facilitate the sales by helping investors send or receive transfers of funds. Reed received nearly $200,000 from the company that was issuing the securities, and he had personally invested over $200,000 in the company.
Based on the foregoing, Reed violated FINRA Rules 3280 and 2010 for participating in these private securities transactions. Reed consented to a bar from associating with any FINRA member firm in all capacities.