The SEC has initiated an administrative proceeding against Judy K. Wolf, a former Wells Fargo Advisors compliance officer, charging her with allegedly altering a compliance record Wells Fargo produced to the SEC during an insider trading investigation. As we previously reported, the underlying investigation resulted in insider trading charges against a former Wells Fargo Advisors broker, Waldyr Da Silva Prado Neto and a settled enforcement action in which Wells Fargo Advisors paid $5 million and admitted wrongdoing for failing to maintain adequate internal controls to prevent Prado from using a client’s material nonpublic information to commit insider trading. In its new action, the SEC alleges that Wolf, who reviewed Prado’s alleged insider trades, altered records after the SEC brought insider trading charges against Prado to make her review appear more thorough.
In its action against Prado, the SEC contended that Prado used a client’s material nonpublic information to profit from a private equity firm’s acquisition of Burger King in 2010. Wolf was the Wells Fargo Advisors compliance officer tasked with reviewing trades in Burger King securities around the time of its acquisition. According to the SEC, shortly after the acquisition, Wolf reviewed trades in Burger King securities and learned that Prado and three of his clients had the firm’s four largest positions in Burger King. She also allegedly discovered they had bought the securities within 10 days of the announcement of the acquisition and each made over $5,000 on their trades. Despite these facts, Wolf closed the review with no findings.
In 2012, after the Commission charged Prado with insider trading, Wolf allegedly retrieved documents concerning her earlier review, and altered the documents to make her original review appear more thorough than it had been. Wolf admitted in testimony before the Commission that she had altered the records in 2012.
Wells Fargo Advisors terminated Wolf’s employment in 2013. The SEC has now charged her with willfully aiding, abetting, and causing violations of the recordkeeping requirements of the Securities Exchange Act of 1934 and the record production requirements of the Investment Advisers Act of 1940.