Update:  Broker Scott Reed, Formerly of Wells Fargo in Scottsdale, Arizona, Appears to Have a History of Recommending High Risk and High Commission Investments to Customers  

**Update:  July 29, 2021**  On July 28, 2021, Iorio Altamirano LLP announced that it is investigating potential claims involving investments in L Bonds offered by GWG Holdings (GWGH).   Upon information and belief, former Wells Fargo broker Scott Reed recommended GWG “L Bonds” to customers.  Customers of Scott Reed can contact Iorio Altamirano LLP for a free and confidential consultation and review of their legal rights.   To read more about Iorio Altamirano LLP’s investigation into GWG “L Bonds,” click on the following link:  Iorio Altamirano LLP Investigates L Bonds offered by GWG Holdings (GWGH)

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Update:  Broker Scott Reed, Formerly of Wells Fargo in Scottsdale, Arizona, Appears to Have a History of Recommending High Risk and High Commission Investments to Customers  

Last month, this blog reported that broker Scott Wayne Reed (CRD No. 3007033) had been barred from the securities industry by the Financial Industry Regulatory Authority (“FINRA”) for participating in private securities transactions totaling at least $3.5 million without providing prior written notice to his firm. Beginning in early 2019 and continuing until his termination from Wells Fargo in April 2020, Mr. Reed solicited at least six individuals, including at least two Wells Fargo customers, to invest in securities issued by Pebblekick, a software and web development company based in Pasadena, California.

Iorio Altamirano LLP has since learned that Mr. Reed has also solicited clients to invest in the following high risk and speculative investments:

  • GWG “L Bonds”: Speculative, high risk, and illiquid “bonds” that are classified as an alternative investment.  An L bond is an unrated life insurance bond that finances the purchase and premium payments of life insurance contracts bought in the secondary market.  Brokers get a commission of 1 to 5% of the market price of the bond.
  • Staffing 360 Solutions, Inc. (STAF): A penny stock that once traded at over $100 / share.
  • Kadmon (KDMN): A publicly traded biotech company founded in 2010 by Sam Waksal, who has previously pled guilty and served jail time for insider trading.   Kadmon has not performed before or after its IPO in 2016.
  • Aequitas: Investments related to or sponsored by Aequitas Management. Aequtias Management was charged by the SEC in 2016 for defrauding investors.  The SEC’s complaint alleged that the investment group defrauded more than 1,500 investors nationwide into believing they were making health care, education, and transportation-related investments. Instead, Aequitas Management primarily used the money to cover its operating expenses and pay earlier investors in a Ponzi-like scheme.

Iorio Altamirano LLP, a securities arbitration law firm, is interested in speaking with customers of Mr. Reed or Wells Fargo.  Contact us today for a free and confidential consultation.   

Arizona Corporation Commission Docket No. S-21132A-20-0370

On December 15, 2020, the Securities Division of the Arizona Corporation Commission filed a “Notice of Opportunity for Hearing Regarding Proposed Order to Cease and Desist, Order for Restitution, Order for Administrative Penalties, Order for Revocation and Order for Other Affirmative Action” (the “Notice”) against Scott Reed, his wife, Pebblekick, Inc., and Don K. Shiroishi, the Chief Executive Officer and President of Pebblelike.  The Notice alleged violations of the Securities Act of Arizona, A.R.S. § 44-1801 et seq. (the “Securities Act”) and Arizona Investment Management Act, A.R.S. § 44-3101 et seq. (“IM Act”).  Specifically, the Notice included the following allegations against Mr. Reed:

  • Reed failed to timely disclose four (4) liens the Internal Service recorded against him for unpaid income taxes for the years 2008 ($46,767), 2009 ($57,075), 2013 and 2014 ($120,971), and 2015 ($17,605).
  • Beginning in early 2019, Mr. Reed solicited at least six individuals, including at least two Wells Fargo customers, to invest in securities issued by Pebblekick, Inc., a software and web development company based in Pasadena, California.
  • The six investors collectively invested at least $3.5 million in exchange for notes from Pebblekick promising to pay the investors interest at annualized rates of sixty percent (60%) or more.
  • Reed received selling compensation of $191,340 from Pebblekick, Inc. for his role in soliciting and facilitating the investments.
  • Reed lied to his employers and securities regulators about his selling away and termination from Wells Fargo.

Allegations related to Wells Fargo Investor One:

  • In January 2020, Mr. Reed proposed to an investor (“Investor One”) that he invest by making a three-month loan to a company in California, Pebblekick, for which the investor would receive a fifteen percent (15%) return.
  • Prior to Mr. Reed approaching Investor One with the Pebblekick investment, Investor One never spoke to Mr. Reed about finding short-term lending opportunities.
  • Reed told Investor One that the investment would be safe and that he and another investor (“Investor Two”) had made a similar investment with Pebblekick.  Mr. Reed even went as far as showing Investor One, Investor Two’s account on his phone.
  • Based on Mr. Reed’s recommendation and assurances that the investment was one hundred percent (100%) safe, Investor One decided to invest $100,000.
  • Reed then requested that Investor One invest $200,000. Mr. Reed told Investor One that Pebblekick would pay him $30,000 interest on the $200,000 investments for three months, which is fifteen percent (15%) for that period or an annualized interest rate of sixty percent (60%).
  • Reed offered to personally guarantee $100,000 of the investment through an email. The guarantee persuaded the customer to invest $200,000.
  • Reed failed to disclose to Investor One that he already owed substantial debts in the amount of $1,452,793, which would impair his ability to repay the debts.
  • In mid-March 2020, Investor One had become nervous about this Pebblekick investment due to COVID-19 and the impact the virus appeared to be having on the economy.
  • During a conversation in late-March 2020, Mr. Reed stated that Pebblekick’s CEO was “in his back pocket” because Mr. Reed had raised $4 million to $5 million for Pebblekick. Reed also represented that Investor Two had invested $1.1 million and had been repaid $600,000.
  • Investor One questioned why Pebblekick would borrow money from him and other individuals and agree to pay an annualized interest rate of sixty percent (60%). He also expressed his concerns that the investment seemed too good to be true.
  • Reed responded that Pebblekick just needed bridge financing until it could access a line of credit coming from a bank in Shanghai, China.
  • Reed said that he would bet that Pebblekick could repay Investor One the following week and suggested that he only ask for half his money back and leave the other half with Pebblekick.
  • When Investor One asked if Wells Fargo backed the Pebblekick investment, Mr. Reed responded, “Hell no. Not at all. This has nothing to do with Wells.”
  • Investor One would not have invested in Pebblekick if Mr. Reed had informed him the investment had nothing to do with Wells Fargo.
  • Investor One eventually received his $200,000 investment back from Pebblekic, but Pebblekick did not pay him any interest.

Allegations related to Wells Fargo Investor Two:

  • Investor Two provided Wells Fargo with copies of text messages in which Mr. Reed solicited and sold Investor Two the following investments: (i) $200,000 in something Mr. Reed called “Precision Surgical,” which Mr. Reed stated that Pebblekick owned; (ii) $200,000 in what Mr. Reed called “Mako Studios (Pebblekick)“; (iii) $200,000 in something Mr. Reed called Ascensive Creator, and (iv) $500,000 in Ascensivc Creator. 

Wells Fargo:  A Duty to Supervise

Financial institutions, like Wells Fargo, must properly supervise financial advisors and customer accounts.  Brokerage firms are required to establish and maintain a reasonably designed system to oversee account activity, such as private securities transactions, to ensure compliance with securities laws and industry regulations.   When a brokerage firm fails to supervise its financial advisors or the investment account activity sufficiently, it may be liable for investment losses sustained by customers.

How to Recover Losses or Obtain a Free Consultation

Iorio Altamirano LLP is a securities arbitration law firm based in New York, NY. We pursue FINRA arbitration claims nationwide on behalf of investors to recover financial losses arising out of wrongful conduct by financial advisors and brokerage firms.

If you have lost money with broker Scott Reed or Wells Fargo, contact New York securities arbitration lawyers August Iorio and Jorge Altamirano of Iorio Altamirano LLP at august@ia-law.com, jorge@ia-law.com or toll-free at (855) 430-4010 for a free and confidential evaluation of your account.

Iorio Altamirano LLP is a bilingual law firm, fluent in both English and Spanish.


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