Wells Fined for Failing to Register Some Massachusetts Brokers
Wells Fargo Clearing Services, LLC has agreed to pay Massachusetts a fine of $450,000 for allegedly failing to properly register brokers who were conducting securities business in the state as recently as last summer.
“We are pleased to have resolved this matter,” a Wells Fargo spokeswoman wrote in an e-mail.
The settlement, which Wells consented to without admitting or denying the facts, follows almost three years of fines, public and private legal settlements and management reorganizations following the disclosure of fake accounts opened for bank customers by employees striving to meet sales quotas.
“I’m surprised the fine is not bigger,” said Debra A. Jenks, whose Florida-based law firm often represents brokers in employment cases and was not involved in the Massachusetts settlement. “This is a highly regulated industry, and it doesn’t really matter whether you’re a big firm or small firm.”
LPL Financial in June agreed to pay Massachusetts $1.1 million for failing to register 651 of its brokers in the state. Michigan’s securities regulator in 2016 fined Oppenheimer & Co. $900,000 for failing to register 40 investment advisors over a seven-year period.
According to the settlement, 1,098 “agents” of Wells Fargo Clearing and 561 of their supervisors had a lapse in their Massachusetts registrations that the state’s Securities Division uncovered during examinations.
“Wells Fargo was informed at least 159 times by the Division between January 1, 2017 and July 31, 2018 that certain supervisors must be registered as agents,” the order said. Some advisors failed to timely meet the state’s annual registration renewal requirement because of “inconsistent” notices from Wells in newsletters and because of reliance on assistants to complete the renewals, according to the consent order.
It did not say how many, if any, of the supervisors or agents were part of Wells’ channel of independent Financial Network contractors. Independent brokers often operate from small offices, and are sometimes overseen for compliance purposes by larger “offices of supervisory jurisdiction” in relatively close proximity. The Wells spokeswoman declined to comment on which wealth channels were addressed in the consent order.
In addition to agreeing to the $450,000 fine, Wells Fargo agreed to review and enhance its policies and procedures related to agent registration.