Massachusetts Secretary of the Commonwealth William Galvin has opened an investigation into Wells Fargo Advisors' practices related to investment accounts.
The investigation seeks information on whether Wells Fargo Advisors made inappropriate referrals of brokerage customers to managed and advisory accounts, unsuitable recommendations of alternative investments and unsuitable referrals and recommendations related to 401(k) rollovers.
The regulatory action comes after Wells Fargo & Co. disclosed that it is reviewing whether some wealth management clients with fiduciary and custody accounts were overcharged.
Galvin is looking for additional information to evaluate the scope of Wells Fargo's internal investigation over inappropriate referrals or recommendations related to rollovers for 401(k) plan participants and some alternative investments. Wells Fargo is also investigating whether inappropriate referrals of brokerage customers to its investment and fiduciary services business occurred.
Galvin said in a news release that referrals and recommendations involving 401(k) accounts should be closely scrutinized, noting the trend of transferring investors into wealth management accounts that could boost company revenues but are not suitable for all investors.
Wells Fargo did not immediately respond to a request for comment.
