FINRA Fines Wells Fargo Clearing Services For Supervisory System Failures

The regulator said the company failed to maintain adequate safeguards for customer information over an eight-year period.

Between January 2014 and March 2022, FINRA claims it found that Wells Fargo did not have a supervisory system or written procedures reasonably designed to protect client data. 

They explained that when certain registered representatives left the firm, Wells Fargo failed to notify insurance carriers, allowing the former representatives continued access to customer records through carriers’ portals.

In total, 241 former representatives retained access to 1,624 customers’ variable annuity accounts. 

The records included names, account numbers, addresses, and in some instances, sensitive data such as Social Security numbers and dates of birth.

FINRA said the firm violated a rule that mandates firms adopt policies to protect non-public customer information. It also cited breaches of other rules, all of which relate to supervisory obligations.

Wells Fargo Clearing Services has accepted FINRA’s findings without admitting or denying the allegations. 

FINRA added that the firm has since amended its procedures to ensure all departing representatives, regardless of classification, are reported to insurance carriers.

As part of the settlement, Wells Fargo received a censure and agreed to pay the fine. The firm also waived its rights to contest the findings or appeal the disciplinary action.