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William K. Harrison ("Harrison") and Eddie W. Sawyers ("Sawyers"), former employees of Wachovia Securities, L.L.C., now known as Wells Fargo Advisors, were charged on December 15, 2010 by the United States Securities and Exchange Commission with securities fraud.
According to the complaint from December 2007 through October 2008, Harrison and Sawyers defraud at least forty-two Wachovia brokerage customers of at least $8 million in customer funds by using misrepresentations and omissions of material fact.
It appears that in December 2007, Harrison and Sawyers, operating under the trade name Harrison/Sawyers Financial Services allowed these individuals to conduct business from an independent Wachovia office and where as part of their sales practices, they were allegedly offering their Wachovia customers an investment opportunity that they misrepresented was guaranteed to make a 35% return, with no risk of loss of principal.
Harrison and Sawyers supposedly told 42 customers that they had a foolproof approach to trading options and that their principal investment was secure and would make handsome returns regardless of market volatility.
Harrison and Sawyers either opened accounts with optionsXpress in the client’s name or commingled the client’s funds in accounts opened in Harrison’s wife’s name or a joint account in the name of Harrison and his wife.
So as to not draw attention to their conduct, Harrison and Sawyers placed "limited trading authorizations" and other related documentation associated with their scheme in the name of Harrison’s wife.
Notwithstanding the foregoing, Wachovia, as part of their off-site supervision of Harrison and Sawyers did not detect their fraudulent sales practices or conversion or commingling of customer funds, apparently until October 13, 2008, when Harrison submitted to Wachovia a resignation letter confessing to to "misdirecting" $6.6 million from seventeen of his Wachovia customers in order to trade online.
He also admitted that he had conducted this online trading without first securing the authorization of these 17 individuals.
In its Complaint, the Commission alleges that Harrison and Sawyers violated Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, and Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 promulgated thereunder.
If you lost money as a result of fraud by your stockbroker or investment professional, contact Nicholas J. Guiliano, Esquire at (877) SEC-ATTY for a free consultation. Our practice is limited to representing investors in claims against stockbroker and investment professionals for fraud. All matters are handled on a contingent fee basis. For more information, please visit us on the Internet at www.securitiesarbitrations.com.
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