National investment loss lawyers KlaymanToskes issues notice to Wells Fargo Securities customers who suffered losses in excess of $100,000 in Special Purpose Acquisition Companies, or “SPACs,” underwritten by Wells Fargo. Investors who had large positions in SPACs at Wells Fargo should contact the firm immediately to discuss recovery options at 888-997-9956.
As a lead manager and underwriter for several SPAC investment offerings, Wells Fargo is responsible for conducting proper, complete and accurate due diligence of each SPAC deal, giving them a heightened duty to disclose any potential risks to their clients. Wells Fargo Securities, Inc. as a registered FINRA broker-dealer, has a responsibility to provide its customers with suitable investment advice, and to avoid conflicts of interest.
Investors who sustained SPAC investment losses in excess of $100,000 at Wells Fargo are encouraged to contact attorney Lawrence L. Klayman, Esq. for free and confidential consultation at (888) 997-9956 or lawrence@klaymantoskes.com to discuss our investigation and recovery options. We do not collect attorney’s fees unless we are able to obtain a financial recovery for you.
Disclosure: Investors that did not sustain losses in excess of $100,000 at the hands of a financial advisor, broker, or brokerage firm need not call.
As of July 2023, the Wells Fargo SPACs listed below have significantly declined from their IPO prices, with the majority having lost more than 50% of their return year to date. If you were recommended to invest in any of the following SPACs by your Wells Fargo broker or financial advisor, you may be able to recover your losses through a FINRA arbitration claim.
The following SPACs are facing significant declines from their IPO prices, noted in red:
REE Automotive Ltd. (NASDAQ: REE)
Parts Id Inc (NYSE AMERICAN: ID)
Sky Harbour Group Corp (NYSE AMERICAN: SKYH)
Abacus Life Inc. (NASDAQ: ABL)
Nuscale Power Corp. (NYSE: SMR)
Brokerage firms that failed to disclose the underlying risks associated with SPAC investments, and/or that failed to recommend risk management strategies to customers with large, concentrated or margined positions may be held liable for investor losses through FINRA arbitration claims.
Investors that suffered losses in excess of $100,000 should immediately contact attorney Lawrence L. Klayman, Esq. for a free consultation at 888-997-9956 and download our SPAC Special Investor Report. We do not collect attorneys fees unless we are able to obtain a financial recovery for you.
The presence of conflicts of interest, where brokerage firms such as Wells Fargo underwrite SPAC investment offerings and seek to gain high commissions and earn lucrative fees, may lead to recommendations that do not align with investors’ needs, risk-tolerance, and investment goals.
Such a conflict may lead to a situation where the broker-dealer prioritizes its own financial interests over those of its customers, resulting in investments that may not be suitable for the investors’ best interests.
The potential for a lack of transparency in disclosing the risks associated with SPAC investments could lead to investors being unaware of certain pitfalls or uncertainties related to the investment, increasing the likelihood of making uninformed or imprudent decisions.
This lack of clarity could also obscure potential conflicts of interest between the underwriting and broker-dealer functions of a firm, potentially undermining investors’ trust in the transparency of the investment process.
Further, negligent management by brokers and financial advisors, such as failing to monitor SPAC developments or ignoring crucial merger details, can result in further adverse investment outcomes. Some brokers and advisors may mislead investors by providing incomplete or inaccurate information about SPACs, their potential risks, or the underlying companies targeted for merger. Brokers and advisors should take into account the inherent volatility of SPAC investments when formulating suitable investment strategies for their clients.
As a broker-dealer, Wells Fargo is regulated by FINRA. FINRA outlined its concern about conflicts of interest in the securities industry in an executive summary, Report on Conflicts of Interest, which identified a trend in the management and marketing of complex financial products to retail investors. According to FINRA, investors “may struggle to understand the features, risks and conflicts associated with these products.”
In the report, FINRA stated, “brokerage firms that manufacture and distribute financial products are required to maintain effective safeguards to avoid pressures on financial advisors to recommend proprietary products to the detriment of investors’ interests.” Brokerage firms with revenue sharing or other partnering arrangements with third parties should exercise the necessary due diligence and independent review of financial products to protect investors’ interests.
Wells Fargo’s role as an underwriter creates an inherent conflict of interest as they are involved in manufacturing the deal and typically given an allocation of that deal to sell to their clients for a commission. Failure to disclose these conflicts and make suitable recommendations in the best interest of the investor opposed to the firm are both legal causes of action that may be alleged in a FINRA arbitration claim for damages.
Concentration or “failure to diversify” is a securities violation that occurs when a financial professional concentrates an investor’s assets in one particular investment, class of investments, or market sector. Concentrated investments are considered unsuitable.
SPACs are a type of investment, meaning holding a large position in one SPAC or a combination of SPACs is unsuitable due to their risky nature.
Brokerage firms such as Wells Fargo, and their registered financial professionals, have a responsibility to ensure that their customers understand the risks associated with concentration, and to disclose and recommend the risk management strategies which can be used to protect the value of the concentrated portfolio.
When full-service brokerage firms and their advisors recommend and/or fail to hedge concentrated positions, they can be held liable in FINRA arbitration claims.
KlaymanToskes can help you determine if your Wells Fargo SPAC investment loss is the result of a securities violation. Contact attorney Lawrence L. Klayman today for a free consultation at (888) 997-9956 or lawrence@klaymantoskes.com.
Our firm offers legal services on a contingency fee basis, meaning we do not collect attorney’s fees unless we are able to obtain a financial recovery for you.
KlaymanToskes is a leading national securities law firm which practices exclusively in the field of securities arbitration on behalf of retail and institutional investors throughout the world in large and complex securities matters. The firm has recovered over $250 million in FINRA arbitrations and over $350 million in other securities litigation matters. KlaymanToskes has office locations in California, Florida, New York, and Puerto Rico.
KlaymanToskes, P.A.
Lawrence L. Klayman, Esq.
888-997-9956
lawrence@klaymantoskes.com
www.klaymantoskes.com