FINRA

SECTION 10(B) OF THE SECURITIES EXCHANGE ACT OF 1934 AND RULE 10B-5 THEREUNDER, NASD RULES 2110, 2120, 2310, 2510(B), 3110 AND INTERPRETATIVE MATERIAL-2310-2: IN CONNECTION WITH THE SALE OF MUTUAL FUNDS TO CUSTOMERS, RESPONDENT STEPHEN WILSON MADE FRAUDULENT MISREPRESENTATIONS TO CUSTOMERS INTENDED TO INDUCE HIS CLIENTS TO INVEST WITH HIM, INCLUDING THAT HIS CUSTOMERS: COULD LIVE OFF MARKET GAINS, INTEREST AND DIVIDENDS WITHOUT EXPERIENCING A REDUCTION IN THEIR PRINCIPAL; WOULD RECEIVE RETURNS AS HIGH AS 9-13 PERCENT; AND COULD LIVE AS WELL IN RETIREMENT AS THEY COULD IF THEY WERE STILL WORKING. IN CONNECTION WITH MUTUAL FUND SWITCHING, WILSON FAILED TO MAKE MATERIAL DISCLOSURES TO CERTAIN CUSTOMERS CONCERNING THE DIFFERENT TYPES OF SHARES AVAILABLE FOR INVESTMENT; THE SALES CHARGES AND OPERATING EXPENSES ASSOCIATED WITH EACH SHARE CLASS AND THEIR EFFECT ON POTENTIAL RETURNS; THE POTENTIAL CONTINGENT DEFERRED SALES CHARGES ("CDSCS") THAT COULD BE LEVIED UPON THE SALE OF THESE SHARES; THE AVAILABILITY OF BREAKPOINTS; THE ABILITY TO TAKE ADVANTAGE OF RIGHTS OF ACCUMULATION BY INVESTING IN CONCENTRATED FUND FAMILIES; AND THE COST-SAVING OPTIONS THAT WERE AVAILABLE INSTEAD OF SWITCHING. WILSON RECOMMENDED UNSUITABLE MUTUAL FUND SWITCH TRANSACTIONS AND ENGAGED IN UNAUTHORIZED TRADING IN CUSTOMERS' ACCOUNTS BY SWITCHING CUSTOMERS' CLASSES OF SHARES WITHOUT THEIR KNOWLEDGE, AUTHORIZATION OR CONSENT. WILSON ALSO ENGAGED IN DISCRETIONARY TRADING IN CUSTOMERS' ACCOUNTS WITHOUT WRITTEN AUTHORIZATION FROM HIS CUSTOMERS OR HIS FIRM. IN ADDITION, WILSON CAUSED THE BOOKS AND RECORDS TO BE INACCURATE BY PROVIDING FALSE INFORMATION FOR SWITCH LOGS AND MISMARKING ORDER TICKETS AS UNSOLICITED, WHEN THE ORDERS WERE, IN FACT, SOLICITED.

Decision

Bar (Permanent)

All Capacities

12/28/2011

HEARING PANEL DECISION RENDERED APRIL 14, 2010 WHEREIN WILSON IS BARRED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANY CAPACITY FOR MAKING FRAUDULENT MISREPRESENTATIONS IN VIOLATION OF SECTION 10(B) OF THE EXCHANGE ACT AND RULE 10B-5 THEREUNDER, AND NASD RULES 2110 AND 2120. WILSON IS ALSO BARRED FOR RECOMMENDING UNSUITABLE MUTUAL FUND SWITCH TRANSACTIONS IN VIOLATION OF NASD RULES 2110, 2310 AND INTERPRETATIVE MATERIAL-2310-2 AND FOR ENGAGING IN UNAUTHORIZED TRADING IN VIOLATION OF NASD RULES 2110 AND INTERPRETATIVE MATERIAL-2310-2. IN ADDITION, WILSON SHALL PAY COSTS OF $13,465.80. NAC DECISION RENDERED DECEMBER 28, 2011 WHEREIN THE FINDINGS MADE ARE HELD AND THE SANCTIONS IMPOSED BY THE HEARING PANEL ARE MODIFIED THEREFORE, RESPONDENT WILSON IS BARRED FOR MAKING UNSUITABLE RECOMMENDATIONS AND THE NAC IMPOSED A SEPARATE BAR FOR HIS UNAUTHORIZED TRADING. THE NAC ALSO ORDERED RESPONDENT WILSON TO PAY HEARING COSTS OF $13,465.80. THE NAC DISMISSED THE HEARING PANEL'S FINDINGS RELATED TO FRAUDULENT MISREPRESENTATIONS AND OMISSIONS IN VIOLATION OF EXCHANGE ACT SECTION 10(B), EXCHANGE ACT RULE 10B-5, AND NASD RULES 2120 AND 2110. WILSON MADE UNSUITABLE RECOMMENDATIONS, IN VIOLATION OF NASD RULES 2310 AND 2110 AND IM-2310-2; ENGAGED IN UNAUTHORIZED TRADING, IN VIOLATION OF NASD RULE 2110 AND IM-2310-2; EXERCISED DISCRETION WITHOUT WRITTEN AUTHORITY, IN VIOLATION OF NASD RULES 2510(B) AND 2110; AND CAUSED HIS FIRM'S INACCURATE BOOKS AND RECORDS, IN VIOLATION OF NASD RULES 3110 AND 2110. WILSON ENGAGED IN UNSUITABLE MUTUAL FUND SWITCHES IN ACCOUNTS OF CUSTOMERS. WILSON FAILED TO RECOMMEND LESS EXPENSIVE FUND ALTERNATIVES WITHIN THE SAME FUND FAMILY, WHICH WOULD HAVE AVOIDED TRIGGERING NEW CONTINGENT DEFERRED SALES CHARGE (CDSC) HOLDING PERIODS FOR CLASS B SHARES. INSTEAD, WILSON LIQUIDATED THE CUSTOMERS' EQUITY FUND HOLDINGS AND USED THE PROCEEDS TO BUY SHARES IN EQUITY FUNDS IN OTHER FUND FAMILIES. AS A RESULT OF THE SWITCHES, THE CUSTOMERS TOGETHER INCURRED CDSCS TOTALING $84,240. WILSON RECEIVED COMMISSIONS OF $36,516 ON THE PURCHASES EFFECTED IN THE SWITCH TRANSACTIONS. WHILE THE PAYMENT OF CDSCS RESULTED IN FEWER OF THE CUSTOMER'S ASSETS UNDER MANAGEMENT, THE SWITCHES ALSO RESULTED IN WILSON RECEIVING HIGHER TRAILER FEES ON THE CUSTOMERS' MUTUAL FUND HOLDINGS. WILSON ENGAGED IN UNAUTHORIZED TRADING BY EFFECTING NUMEROUS MUTUAL FUND SWITCHES IN THE ACCOUNTS OF CUSTOMERS WITHOUT THE CUSTOMERS' PERMISSION. WILSON EXERCISED DISCRETION IN CUSTOMER ACCOUNTS WITHOUT THE REQUISITE WRITTEN AUTHORIZATION. WILSON DID NOT HAVE ANY DISCRETIONARY ACCOUNTS AND HIS MEMBER FIRM PROHIBITED REGISTERED REPRESENTATIVES FROM DISCRETIONARY TRADING IN RETIREMENT ACCOUNTS. WILSON NONETHELESS, ACCORDING TO TESTIMONY GIVEN BY SOME OF HIS CUSTOMERS, EXERCISED DISCRETIONARY TRADING AUTHORITY IN THEIR ACCOUNTS. WILSON ADMITTED THAT, IN SOME INSTANCES, HE DID NOT CONTACT THE CUSTOMERS UNTIL AFTER THE TRANSACTIONS OCCURRED, AND HE PROVIDED NO EVIDENCE TO SHOW THAT HE HAD PROCURED PRIOR WRITTEN AUTHORIZATION FROM THE CUSTOMERS OR THE FIRM TO EXERCISE DISCRETION. WILSON CAUSED HIS MEMBER FIRM'S BOOKS AND RECORDS TO BE INACCURATE WHEN HE CAUSED HIS FIRM TO MAKE INACCURATE ENTRIES IN THE MUTUAL FUND SWITCH LOG THAT IT REQUIRED BRANCH OFFICES TO MAINTAIN AND TO FALSELY REPRESENT THAT CERTAIN MUTUAL FUND TRANSACTIONS WERE UNSOLICITED.

ALL OF THE 27 CLAIMANTS WERE COLLECTED FROM MY APPROXIMATELY 600 FORMER VERIZON EMPLOYEE CLIENTELE BECAUSE THEY WERE ALL ASKED WHO THEY KNEW THAT HAD STEVE WILSON AS THEIR BROKER. MY NICHE OF 16 YEARS OF PRIMARILY HELPING THE GTE/VERIZON EMPLOYEE HELPED CREATE THIS UNWARRANTED CLAIM. ALL OUT-PERFORMED THE MARKET AND MOST MADE MONEY BUT WACHOVIA ELECTED TO OFFER SETTLEMENT TO ALL SO AS TO REDUCE THEIR COSTS IN THIS MATTER.THE SUM AND SUBSTANCE OF THE ALLEGATIONS OF LACK OF DISCLOSURE, UNAUTHORIZED TRADING, SELF MISREPRESENTATIONS, UNSUITABLE RECOMMENDATIONS, AND FALSIFICATION OF BOOKS AND RECORDS IS PATENTLY UNTRUE AND CANNOT BE PROVEN BECAUSE THEY DIDN'T OCCUR.

CALIFORNIA RESIDENT WAS ORIGINALLY PART OF A GROUP OF CLAIMANTS WHO FILED A CONSOLIDATED ACTION CALLED [THIRD PARTY], ET AL. V. WACHOVIA AND WILSON, NASD CASE NO. 05-03626, WHICH WAS ORDERED SEVERED. CLAIMANT ALLEGES THAT FA STEPHEN WILSON WRONGFULLY MISCHARACTERIZED HIS INVESTMENT OBJECTIVE AS "GROWTH & MODERATE" INSTEAD OF "INCOME & CONSERVATIVE", INVESTED RETIREMENT FUNDS IN UNSUITABLE EQUITY MUTUAL FUNDS WITHOUT DISCLOSING BREAKPOINTS THAT WOULD HAVE BEEN AVAILABLE FROM INVESTING IN A SHARES, VERSUS THE B SHARES PURCHASED, AND MADE UNAUTHORIZED MUTUAL FUNDS SWITCHES. CLAIMANT REQUESTS AN AWARD OF $32851 IN COMPENSATORY DAMAGES, PLUS COSTS AND EXPENSES, ATTORNEYS' FEES, PUNITIVE DAMAGES AND PREJUDGMENT INTEREST

$32,851.00

$13,713.36

THE ALLEGATIONS PRESENTED BY THE STATEMENT OF CLAIM ARE COMPLETELY UNSUPPORTED. WHAT'S MORE THE PHYSICAL RECORD OF EVENTS COMPLETELY REFUTES THE ALLEGATION. IT'S SIMPLY IRRESPONSIBLE TO SUGGEST THAT STEPHEN WILSON AND WACHOVIA SECURITIES WERE IN ANY WAY RESPONSIBLE FOR THE 3 YEAR DOWNTURN IN THE MARKET BETWEEN MARCH 2000 AND THE END OF 2002 ESPECIALLY WHEN MOST OF THE CLAIMANT'S DECLINES WERE DUE TO EXCESSIVE WITHDRAWALS, I.E., CLAIMANT ASKED FOR $32,851.00 IN DAMAGES AND COURT COSTS BUT HAD TO PAY THE COURT COSTS AND WAS AWARDED ONLY $13,713.36 WHICH WAS CONSIDERABLY MORE THAN WHAT THE CLAIMANT ACTUALLY LOST. THIS ALL OCCURRING IN AN ENVIRONMENT WHERE THE MARKET DECLINED MORE THAN 40%. STEPHEN WILSON WAS NOT COMPELLED TO PAY ANY PORTION OF THE CLAIMANT AWARD AND HE WAS DISAPPOINTED THAT WACHOVIA SECURITIES CHOSE TO SETTLE THE CLAIM BECAUSE THEY DIDN'T WANT TO INCUR THE ATTORNEY FEES.