Wells Fargo Fined $1M Over Supervision of Consolidated Client Reports
The Financial Industry Regulatory Authority says that Wells Fargo (WFC) must pay a $1M fine for not having reasonable supervisory systems in place to oversee the generation of consolidated reports for clients. The broker-dealers that were specifically cited were Wells Fargo Advisors Financial Network (WFAFN) and Wells Fargo Advisors (WFA), also referred to as Wells Fargo Clearing Services.They agreed to settle but did not admit or deny the settlement’s findings.
FINRA’s rules mandate that consolidated reports, which are documents that include information about a customer’s financial holdings, even if they are held in different places, must be accurate, clear, and not misleading. According to the regulator, between 6/2009 and 6/2015, the brokerage firms did not enforce supervisory systems for the use of consolidated reports that registered representatives generated via a specific application. During the relevant period, Wells Fargo advisers used the application to create over five million company reports.
The self-regulatory organization’s settlement stated that the two Wells Fargo firms did not review what was in the consolidated reports at issue or provide a mechanism to let representatives mark which reports were actually given to customers. FINRA believes that the brokerage firms could not tell the difference between reports that were in draft version and those that were completed and given to customers—the latter needing to have been subject to supervisory review.
It was just in 2014 that FINRA fined both Wells Fargo units $1.5M also for purported anti-money laundering violations.
Credit Suisse Fined $16.5M over AML Violations
Credit Suisse Securities (USA) LLC must pay a $16.5M fine after FINRA found that the firm committed anti-money laundering violations. According to the regulator, there were deficiencies with Credit Suisse’s program for monitoring for suspect activity, including that the firm mostly depended on registered representatives to identify and “escalate” suspect trading, which didn’t always happen; the automated surveillance system for looking out for potentially suspect movements of funds were improperly implemented; a substantive chunk of data that feeds into the system had problems that negatively affected the effectiveness of the system; the firm decided not to use certain scenarios that were available for identifying common suspect activities; and Credit Suisse neglected to adequately investigate suspect activities when the scenarios used did identify them.
Credit Suisse also, purportedly, from 1/2011 through 7/2013, depended on its registered representatives to effectively review trading for anti-money laundering reporting even though this was the job of Credit Suisse’ anti-money laundering department. FINRA noted that the firm’s systems and procedures weren’t designed to be able to identify such activities so that the necessary reports could be filed.
The regulator also said that Credit Suisse had “deficient” procedures related to compliance regarding the “prohibition of the sale of unregistered securities.” The SRO said that from ‘11 to ‘13, Credit Suisse played a part in facilitating the “illegal distribution” of a minimum of 55 million securities shares that were unregistered.
In settling, however, the firm is not denying or admitting to the SRO’s charges.
Wells Fargo Fined $1M by FINRA Over Client Reports, InvestmentNews, December 6, 2016