State enters consent order with Wachovia Securities

According to a news release from Carnahan’s office, the order requires Wachovia to pay $300,000 to the Missouri Secretary of State’s Investor Education and Protection Fund for the alleged failure to supervise an agent of Evern Securites Inc. and First Union Securities Inc. in Missouri.

William Ramey Mead Jr. was a registered agent of Everen Securities and First Union Securities. He worked in branch offices in Illinois and Missouri 1992–2002. According to the order, Mead made unsuitable investment recommendations, but he was not disciplined at any time by either company until his employment was terminated in May 2002.

Mead failed to document the financial status of his clients, including their annual incomes, liquid assets and net worth, based on a sampling of 38 new account forms completed by him. The order also alleges that Mead often encouraged clients not to provide personal financial data, which minimized the supervisor’s ability to make an appropriate suitability determination.

Mead is no longer registered to sell securities in Missouri.

“Missouri investors should be able to have confidence in broker-dealers registered in Missouri,” said Carnahan in the release. “For this to happen, firms are required to adequately supervise their agents.”

In the consent order, Wachovia indicates that it has enhanced its supervisory procedures in detecting and preventing customer account abuses by its Missouri-registered agents in relation to the suitability of investment recommendations.

Between May 2002 and October 2004, Wachovia entered into settlement agreements totaling more than $2 million with Mead’s former clients.