Posted on 10/07/2016 11:51:41 PM PDT by nickcarraway
A North Dallas man is so angry with Wells Fargo, he has taken out a full-page ad in The Dallas Morning News and three other newspapers Thursday to the tune of a quarter-of-a-million dollars.
Lacy Harber, 80, of Dennison, says he lost close to $5 million one day alone in a dealing with one of the branches of Wells Fargo.
It has been very upsetting to both Harber and his wife, and in his full-page ad, he used the words "greed," "dishonesty," and "betrayal" in describing the San Francisco-based banking giant.
Harber says he is a longtime customer, and Wells Fargo profited from him, while he lost millions of dollars.
Harber is asking the Senate Banking Committee and House Financial Services Members to look into the advisors at Wells Fargo. The bank itself has already been facing questions about its practices on Capitol Hill.
"It has been my goal since we got married to work hard, be honest, don't steal, don't lie, make a whole lot of money, and before we die, give it all away to charity," said Harber in an interview with NBC 5.
Harber said his message was all about principal. He is self-made and planned to leave $500 million plus the profits from the trading accounts from Wells Fargo to Texas Scottish Rite Hospital for Children.
Harber says when he was 7 years old, he had a severe curvature of the spine. He lived in Abilene, and Scottish Rite paid for him to take the train to the hospital for treatment every six weeks.
"Today at 80 years. I am still alive," said Harber. "It is the smallest payback."
At one relevant point, I was joint trustee on an account at Wells Fargo. Money would come to me, I would deposit it, and the other Trustee would then pay bills.
At the time, I couldn’t understand why Wells seemed reluctant to accept the deposits. The names on the check matched the names on the account, I had printed deposit tickets, and I wasn’t trying to hang on to any of the money in the checks. Now, I’d bet that they had set up multiple accounts, and that was what was causing the problems. They also sent an unrequested debit card, which was inappropriate for this account.
Thanks for bringing some facts to the discussion.
Well, if he made the decisions what is he bitching about?
Please read my post #19 (above) for what Paul Harvey used to call "the rest of the story".
Don't take this as a generic defense of Wells Fargo. But, in this particular case, the investor made a bad choice by buying a lot of stock on margin, and not making a margin call.
The SEC imposes margin requirements on investors and brokerages. This guy appears to be saying that Wells Fargo should have bent the rules for him, but I don't think the brokerage has that much discretion.
“This guy appears to be saying that Wells Fargo should have bent the rules for him,”
Yes always two sides to a story.
People think they should get special treatment at the expense of a company breaking rules/laws for them.
The current stupid thing that WF did will bring people like that out of the woodwork.
They will use WF’s misdeeds as cover for a bad decision they made.
I think he wanted Wells Fargo to make an exception for him (by not enforcing the margin requirements).
I'm not sure the brokerage has that much discretion, per SEC rules. There might be more to the story -- i.e. he asked for a bit more time to meet the margin call, and didn't get it. And, we haven't seen his actual margin agreement with the brokerage. However, if Wells Fargo actually violated the margin agreement -- this dispute would be in court or arbitration, instead of in the news.
As the SEC page I linked in #19 says: the brokerage may not even be required to give him an opportunity to meet the margin call, and doesn't have to wait for him to act:
If your account falls below the firm's maintenance requirement, your firm generally will make a margin call to ask you to deposit more cash or securities into your account. If you are unable to meet the margin call, your firm will sell your securities to increase the equity in your account up to or above the firm's maintenance requirement.
Always remember that your broker may not be required to make a margin call or otherwise tell you that your account has fallen below the firm's maintenance requirement. Your broker may be able to sell your securities at any time without consulting you first. Under most margin agreements, even if your firm offers to give you time to increase the equity in your account, it can sell your securities without waiting for you to meet the margin call.
I’ve been reading a lot about investing lately, and it isn’t rocket science.
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Buy low and sell high.
Thank you for that excellent explanation. I wonder, though, if there are alternative SEC resolution paths that were previously employed, that Wells Fargo didn't use this time, that would have protected him. On the other hand he lost five million bucks, so he's trying to get it back by claiming unfairness. My Spidey Sense is tingling because of how extraordinarily sparse the reporting is about this - like the media is trying to protect the revelation of a common gambit that people with megabucks use, so that the riff raff don't learn about it.
You don't need megabucks to buy on margin.
But, you need megabucks to LOSE megabucks while buying on margin.
The $483,000 in brokerage fees sounds very strange.
I’ll guess the purchase fees were no more than a couple thousand dollars, and might have been much less.
And, peak interest rates at a major broker for very high value margin accounts are probably in the 7% to 8% range.
So, one day of margin interest would be less than $10,000.
I’m wondering if Wells may have bought a big chunk of protective put options to hedge the position when the buyer could not immediately cover his margin call?
I haven’t traded on margin since the huge bull market in 1999, so maybe a lot of things have changed since then?
And, frankly, why is an 80 year old man risking that much money on a speculative whim?
No, they liquidated all or a significant portion of his account to cover the margin call. Depending on his mix of assets, it could have easily been that much.
And, frankly, why is an 80 year old man risking that much money on a speculative whim?
The guy reportedly had $500 million in brokerage assets, and much more than that in other less liquid assets. It's a drop in the bucket for him.
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