Wells Fargo Clearing Services, LLC has agreed to pay a fine of $150,000 as a part of a settlement with the Financial Industry Regulatory Authority (FINRA).
From January 2014 through March 2022, Wells Fargo failed to establish and maintain a supervisory system, including written supervisory procedures, reasonably designed to safeguard customer information
When registered representatives left the firm, Wells Fargo would notify insurance carriers so the carriers would remove these representatives’ access to firm customers’ variable annuity accounts on the carriers’ portals.
The firm provided notice only for representatives it characterized as “producing” (i.e., tasked with selling products to customers) and did not notify insurance carriers when “non-producing” representatives departed. Wells Fargo, however, miscategorized certain producing registered representatives as non-producing in its internal system.
Therefore, when 241 of these registered representatives departed, the insurance carriers were not notified. As a result, these former representatives continued to maintain their access to 1,624 firm customers’ variable annuity accounts on the carriers’ portals, including the customers’ names, addresses, account numbers, account balances, and in at least some instances, other nonpublic personal information such as dates of birth and social security numbers.
In March 2022, Wells Fargo notified the carriers of the former representatives it had previously omitted. The firm also modified its procedures to require carriers be notified of all representatives who leave the firm, regardless of their status as producing or non- producing.
By failing to establish a supervisory system reasonably designed to safeguard customer information, Wells Fargo violated Rule 30(a) of Regulation S-P, FINRA Rules 3110(a), 3110(b), and 2010, and NASD Rule 3010.
On top of the $150,000 fine, the firm has agreed to a censure.
