FINRA Fines Wells Fargo $1M for Document Delays
May 16, 2011
FINRA has hit Wells Fargo Advisors with $1 million in fines for delayed delivery of prospectuses to its mutual fund customers and required regulatory disclosure information about its representatives.
FINRA alleges that about 934,000 Wells Fargo mutual fund customers did not receive prospectuses within three business days of a transaction in 2009 in accordance with federal law. Those customers received the prospectuses from one to 153 days late, FINRA said. Wells Fargo failed to properly address the problem after its third-party service provider for prospectus delivery alerted the firm to the problem, FINRA said. FINRA did not name that third-party service provider.
â€œMutual fund prospectuses contain key information about a fundâ€™s performance, risks, strategies and costs,â€ said FINRA EVP and Chief of Enforcement Brad Bennett. â€œWells Fargo ignored reports alerting them to serious problems with its prospectus delivery system and, as a result, its customers were deprived of valuable information needed to make informed investment decisions.â€
Wells Fargo also failed to provide timely disclosure reports for representatives currently and previously employed by the firm. That included applications for registration, or U4 forms, and termination notices, U5 forms.
Lori Konish writes for Financial Planning.