The National Association of Securities Dealers has levied a fine against San Francisco-based bank
for not disclosing that a lead analyst had been pursuing and then accepted a job at one of the companies she had been covering.
The NASD fined Wells Fargo $250,000 because former analyst Jennifer Jordan issued a series of positive reports two years ago about San Jose, Calif.-based
Cadence Design Systems
. In one of the reports, she raised her price target for Cadence from $16 a share to $18 without disclosing that she had been pursuing a job at the company.
As part of Jordan's compensation package with Cadence, she received 15,000 shares of the company's stock, along with the option to purchase an additional 75,000 shares, once she started working there. A message left with Jordan at Cadence's offices requesting comment was not returned. She works at Cadence in its investor relations unit.
Cadence designs semiconductors for use in the global electronics market.
The NASD also imposed a $40,000 fine and 60-day supervisory suspension against Wells Fargo's former director of research, Douglas van Dorsten, who oversaw Jordan, for not ensuring that the conflict of interest was revealed along with the reports issued to clients.
The NASD announcement came on the same day that Wells Fargo named John G. Stumpf as CEO, replacing Richard Kovacevich.
Wells Fargo spokeswoman Susan Stanley said the bank doesn't admit or deny any wrongdoing in connection with the settlement. Wells Fargo Securities' services won't be affected in any way, she said.
The firm stopped providing sell-side institutional equity brokerage and research products and services in August 2005.
"The actions announced today should remind brokerage firms and research analysts of the importance of full disclosure of conflicts of interest in research reports," said James Shorris, NASD executive vice president and head of enforcement, in a press statement.
A call to the NASD requesting additional comment was not returned.