In the latest string of incidents to affect Wells Fargo well known for its recent “new” account scandal, FINRA fines Wells Fargo for failing to supervise broker’s accounts. Two Wells Fargo subsidiaries have agreed to pay $1 million to settle claims that they failed to supervise brokers’ use of a reporting system, which led to questions of whether certain financial reports were sent to consumers as required.
Over a six-year period, Wells Fargo Advisors LLC and Wells Fargo Advisors Financial Network LLC reviewed only approximately 2 percent of consolidated reports detailing consumers’ financial holdings and were generated through a specific program. The subsidiaries had no way to track the content of those reports, which meant that there was no way to know if the reports ever reached their intended destination – the customer.
Consolidated reports detail consumers’ financial holdings, and are considered communications with the public, so they must be clear and accurate according to FINRA rules. The agency sent a warning in 2015 to its member brokerage firms that failing to properly monitor consolidated reports could lead to unscrupulous individuals disguising theft or cause a miscalculation or mismanagement of customer funds.
Of the roughly 2 percent of consolidated reports generated by the subsidiaries, FINRA found that only the cover sheets were reviewed, focusing on grammatical errors, contact information and the like and not the actual content contained within the report.
FINRA also alleged that the subsidiaries had no way to designate between a draft of a report and the final version thing because there was no procedure in place to mark which was which – something that should have triggered the company’s supervisory obligations.
More than 5 million consolidated reports were generated through this system from 2009 and 2015.
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Even big banks and their subsidiaries can and do make mistakes. As evidenced by the above. If you believe you have suffered a loss as a result of your broker or banks’ mismanagement, you may have certain legal rights that require your immediate attention.
Contact an experienced Los Angeles securities fraud attorney today for a consultation to discuss your rights and options.