Wells Fargo Fined by FINRA Over Trade Reporting Failure | LeapRate | Online Trading Industry News, Broker Intelligence & Fintech Analysis
Wells Fargo Clearing Services has been censured and fined $125,000 by the Financial Industry Regulatory Authority after the US broker failed to report hundreds of thousands of trades and neglected to maintain adequate supervisory systems over a period spanning several years.
According to a Letter of Acceptance, Waiver and Consent submitted by the firm, Wells Fargo failed to report 837,805 fractional share trades to the relevant FINRA trade reporting facilities between January 2018 and July 2022.
The firm also failed to report approximately 46,000 error correction trades between January 2018 and October 2023. Both categories of trade were executed on a principal basis and were subject to FINRA’s reporting requirements.
FINRA found that Wells Fargo lacked a system for reporting fractional share transactions until January 2019, having failed to appreciate that such an obligation existed.
Even after reporting began, a flaw in the firm’s system meant thousands of manual transactions continued to go unreported until July 2022. A system capable of reporting all types of error correction trades was not completed until October 2023.
In addition, Wells Fargo failed to identify the contra side executing broker-dealer in 468,005 fractional share trade reports submitted between January 2019 and April 2022.
The regulator found the firm had also violated its supervisory obligations by failing to establish adequate written procedures relating to these reporting requirements. Wells Fargo neither admitted nor denied the findings as part of the settlement.
