Disciplinary actions have been taken against Wells Fargo Advisors over supervisory lapses that resulted in failures to protect certain customer information, according to AdvisorHub.
In a letter of acceptance, waiver, and consent, the Financial Industry Regulatory Authority disclosed that it has fined Wells Fargo $150,000 and censured the firm over the violations.
FINRA’s investigation, prompted by a regulatory tip, pertained to 241 brokers who left Wells Fargo between 2014 and 2022 but still had access to data of 1,624 customers with variable annuity accounts. FINRA said the brokers were still able to view the customers’ non-public information, including names, addresses and Social Security numbers, through accounts at third-party insurance carriers.
This lapse was reported to have been the result of an error in the manner in which the brokers were categorized. According to FINRA, Wells Fargo notified insurance carriers when brokers left the firm so the insurers could remove those brokers’ access to customer variable annuity accounts, but it only did so if they were labeled “producing.” But Wells had miscategorized certain brokers as “non-producing” in its internal systems, thus allowing them to have continued access through the insurance carriers’ portals.
It was determined that Wells had failed to establish a supervisory system reasonably designed to safeguard customer information, in violation of several FINRA rules and the Securities and Exchange Commission’s Regulation S-P, which requires that firms maintain written “policies and procedures” to protect customer information.
Wells Fargo did not admit or deny the allegations but consented to the penalty. The firm also notified insurance companies of all former brokers who had previously been omitted and modified its procedures. A Wells spokesperson said in a statement that the firm is pleased to have resolved the matter.
The attorneys at Lewitas Hyman include former senior attorneys at the SEC whose legal experience and industry knowledge make them uniquely qualified to provide counsel on securities regulatory, compliance and enforcement matters. Our attorneys fully understand the regulatory scrutiny financial professionals and their firms face from the various regulators that oversee the financial services industry. If your firm is facing an investigation from a regulatory agency, please contact Lewitas Hyman at (888) 655-6002 or through our online contact form.
