The Securities and Exchange Commission said Wednesday it brought an 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.
Judy K. Wolf was responsible for identifying potentially suspicious trading by Wells Fargo personnel and its customers and clients, and then analyzing whether the trades may have been based on inside information.
According to the SEC’s order bringing an administrative proceeding against Wolf, she created a document in September 2010 to summarize her review of a particular Wells Fargo broker’s trading, and she closed her review with no findings.
Wolf altered that document in December 2012 after the SEC charged the broker with trading based on material nonpublic information, the SEC said.
By altering the document, “Wolf made it appear that she performed a more thorough review in 2010 than she actually had,” the SEC said.
Wells Fargo provided the document to the SEC as part of the agency’s investigation. The SEC enforcement staff spotted the alteration and questioned Wolf specifically about it.
“At first she unequivocally denied altering the document after September 2010, but in later testimony she testified that she had done so,” the SEC said.
Wells Fargo agreed to pay $5 million to settle the insider trading case and other securities law violations.
The bank placed Wolf on administrative leave and ultimately fired her, the SEC said.
The enforcement action against Wells Fargo involved Waldyr Da Silva Prado Neto. He worked for Wells Fargo Advisors in a branch office in Miami.
In September 2012, the SEC charged Prado with trading Burger King stock based on nonpublic information about a plan by 3G Capital Partners to buy the company and take it private. The SEC alleged that Prado and at least three of his customers who he tipped traded the stock through Wells Fargo Advisors brokerage accounts.
Prado and his tippees made total profits of more than $2 million from the trades, the SEC said.
Daniel Hawke of the SEC said Wednesday, “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.”
“Regardless of her motivation, her conduct was inconsistent with what the SEC expects of compliance professionals and what the law requires,” he said.
Wolf lives in St. Louis.
Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.