Last month, the SEC filed a civil injunctive action against two former
Wachovia employees. According to the SEC Litigation Release, the complaint
charged William K. Harrison and Eddie W. Sawyers with securities fraud
and alleged that the two men defrauded at least 42 Wachovia customers
from December of 2007 to October 2008.
The complaint further alleged that the men (as Harrison/Sawyers Financial
Services) solicited Wachovia customers to invest in a securities product,
which they misrepresented as having zero risk and a guaranteed 35% rate
of return. The men were also accused of misleading customers about their
investment strategy with claims that they "had a foolproof approach
to trading options and that their principal investment was secure and
would make handsome returns regardless of market volatility," according
to the Litigation Release.
In an assumed attempt to keep the scam hidden, the men put much of the
documentation and many of the bank accounts associated with the scam in
the name of Harrison's wife. While the investment was initially successful,
by October of 2008 many investors had suffered substantial losses and
most of the money Harrison and Sawyers had raised was gone.
As reported in the Release, in his Oct. 13, 2008 Wachovia resignation
letter, Harrison admitted to "misdirecting" $6.6 million from
his Wachovia customers without their prior authorization. No further actions
have been taken by the SEC as of yet.