The Securities and Exchange Commission has charged a former Wells Fargo Advisors Financial Network registered representative with defrauding his retail brokerage customers out of more than $1 million in a long-running scheme.
According to the SEC’s complaint, John Greg Schmidt allegedly sold securities of at least seven of his customers and secretly transferred more than $1 million in proceeds to 10 other customers to cover shortfalls in their accounts.
As alleged in the complaint, Schmidt made unauthorized sales and withdrawals from variable annuities held by the customers, secretly transferring funds using fraudulent letters of authorization, and issuing fake account statements.
Most of the customers were elderly with little to no financial expertise and were particularly vulnerable, the SEC said. Schmidt received more than $230,000 in brokerage commissions from these customers.
SEC is seeking a judgment ordering Schmidt to disgorge his ill-gotten gains with prejudgment interest, and to pay civil penalties.