August 5, 2015 / 11:48 PM / 2 years ago

Ex-Wells Fargo compliance officer spared penalty in U.S. SEC case

NEW YORK, Aug 5 (Reuters) - A former Wells Fargo & Co compliance officer accused of altering a document sought by U.S. securities regulators for an insider trading investigation won the dismissal of her case Wednesday after a judge ruled against sanctioning her.

Judy Wolf, the compliance officer, was found by an U.S. Securities and Exchange Commission administrative law judge to have willfully aided and abetted and caused securities law violations by Wells Fargo.

But SEC Administrative Law Judge Cameron Elliot, who presided over a trial before the agency’s in-house court, ruled that sanctioning Wolf would create the “misperception” in the industry that she alone was responsible for the violation.

He noted that Wells Fargo in September 2014 agreed to pay $5 million and admit wrongdoing to resolve charges it did not have adequate controls in place to prevent an employee from insider trading.

“Wells Fargo clearly had much deeper and more systemic problems than one bad apple,” Elliot wrote.

A spokeswoman for the SEC declined comment. A lawyer for Wolf did not respond to a request for comment, nor did a spokesman for Wells Fargo.

According to the SEC, in 2010, Wolf, then at Wells Fargo Advisors LLC, closed an internal review of a Brazil-based broker’s trading in Burger King with no findings.

The broker, Waldyr Da Silva Prado Neto, was subsequently charged in criminal and civil proceedings with trading illegally in Burger King securities before the $3.26 billion buyout of the fast-food chain by private equity firm 3G Capital Partners.

After the SEC charged Prado in 2012, Wolf changed a document to make it appear as if she had performed a more thorough review, the agency said.

The SEC said its staff spotted the alteration after Wells Fargo provided the document as part of the commission’s investigation. Wolf initially denied changing it, but later testified she had done so, the SEC said.

Federal prosecutors in Manhattan charged Prado and Igor Cornelsen, a banker and fellow Brazilian, in January 2014, saying the men made respective profits of $1.68 million and $175,000 trading ahead of the deal’s announcement.

Neither Prado nor Cornelsen have appeared in U.S. court to face the criminal charges.

Cornelson agreed in 2012 to pay $5.1 million to settle earlier SEC charges. The agency obtained a $5.63 million default judgment against Prado in January 2014.

The case is In the Matter of Judy K. Wolf, U.S. Securities and Exchange Commission, Administrative Proceeding No. 3-16195. (Reporting by Nate Raymond in New York; Editing by Diane Craft)

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