The Securities and Exchange Commission this week brought an enforcement action against a former Wells Fargo Advisors compliance officer for allegedly altering a document before it was provided to the SEC during an investigation.

The SEC instituted an administrative proceeding against Judy Wolf, former compliance officer for Wells Fargo Advisors, who was responsible for identifying potentially suspicious trading by Wells Fargo personnel, or the firm’s customers and clients, and then analyzing whether the trades may have been based on material nonpublic information. 

According to the SEC, Wolf created a document in September 2010 to summarize her review of a particular Wells Fargo broker’s trading and closed her review with no findings. The SEC Enforcement Division alleged 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,” the SEC stated.

After Wells Fargo provided the document to the SEC as part of its 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 stated.

“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,” Daniel Hawke, Chief of the SEC Enforcement Division’s Market Abuse Unit, said in a statement. “Regardless of her motivation, her conduct was inconsistent with what the SEC expects of compliance professionals and what the law requires.”

The SEC previously charged Wells Fargo in September 2014 with failing to maintain adequate controls to prevent Wolf from insider trading based on a customer’s nonpublic information.  The SEC also charged Wells Fargo for unreasonably delaying its production of documents during the SEC’s investigation and providing an altered internal document related to a compliance review of the broker’s trading.

Wells Fargo, which admitted wrongdoing, agreed to pay $5 million to settle the charges.  Prior to the enforcement action, Wells Fargo placed Wolf on administrative leave and ultimately terminated her employment.

 

 

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