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Wells Fargo fined $2.25 million by FINRA over recordkeeping violations

On Behalf of | Dec 13, 2021 | FINRA Compliance

Two divisions of Wells Fargo & Co. have been fined by the Financial Industry Regulatory Authority over violations involving customer recordkeeping, AdvisorHub reports.

According to a Letter of Acceptance, Waiver and Consent issued this week, FINRA fined Wells Fargo $2.25 million and censured its broker-dealer businesses. Wells Fargo executives signed the letter, consenting to the fine without admitting or denying the findings.

FINRA concluded that from 2003 to August 2020, Wells Fargo Clearing Services and its Wells Fargo Financial Network failed to store about 13 million customer identification records in the required “write once, read many” (“WORM”) format. The authority said those records are a key component of anti-money laundering efforts and as a result of the failure were vulnerable to being altered or erased.

FINRA stated that the two Wells Fargo divisions first became aware of the issue in late 2016 but did not advise FINRA about it at the time, and did not take steps to fix the deficiency or report it to FINRA for another three years. The divisions eventually self-reported the issue in April 2020.

In a statement, Wells Fargo said it was pleased to have the issue resolved, saying “we take our regulatory responsibilities seriously.” It did not say that documents had been altered.

The WORM format is required under FINRA rules and securities laws for storage of customer identification information in a manner that is not erasable and not rewritable. Of the 13 million records that were improperly maintained, about 11.7 million involved Wells Fargo Clearing Services and the remainder were from Wells Fargo Financial Network. FINRA said the platform on which the records were stored was not WORM compliant and did not have the required audit system.

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