FINRA fined Wells Fargo $1 million for failing to have instituted reasonable supervisory systems to watch advisors’ creation of consolidated reports for clients. The fine and settlement referenced two Wells Fargo firms failing to enforce supervisory systems “for the use of consolidated reports generated by their registered representatives through a particular application that the firms made available” to brokers between June 2009 and June 2015.
Consolidated reports are documents to clients by brokers that combine account information pertaining to clients’ financial holdings, regardless of where those assets are held. The regulator’s rules require consolidated reports, which are communications with the public, to be clear, accurate, and not misleading.
The firms “failed to review the content of the consolidated reports generated using the application, including customized values for assets and accounts held away from the firms,” according to the settlement. “Further, the firms failed to provide a mechanism allowing their representatives to designate which application reports were actually provided to customers.” The two Wells Fargo firms “could not distinguish between draft application reports and reports that were completed and sent to customers, which should have been subjected to the firms’ supervisory systems designed to review customer communications.”
Wells Fargo advisers’ generated more than five million such reports during the cited time period using the company application, according to the settlement.If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-741-7503 to discuss your potential legal remedies or complete the contact form.