Finra investigating Wells Fargo for possible Reg S-P violations

Finra is investigating Wells Fargo Advisors LLC to determine whether the firm of 16,000 advisers violated rules that protect private client information.

Finra is investigating Wells Fargo Advisors LLC to determine whether the firm of 16,000 advisers violated rules that protect private client information.
What’s more, the securities industry’s self-regulator is also looking under the hood at Wells and inquiring about bonuses and upfront money given to reps that recently joined the firm, according to documents obtained by InvestmentNews.
In a December letter to a Wells broker (the name was redacted in the copy obtained by IN), Finra examiner Bryan Varvel stated that the “inquiry is specifically looking into matters concerning Regulation S-P and safeguarding customer information” when the broker joined Wells Fargo Advisors, formerly Wachovia Securities LLC.
Regulation S-P prohibits disclosure of non-public personal information about clients to non-affiliated third parties such as other broker-dealers.
Protecting clients’ private information has been a high priority for the Securities and Exchange Commission and the Financial Industry Regulatory Authority Inc. of late. In April, the SEC fined independent broker-dealer Woodbury Financial Services Inc. $65,000 for a variety of violations of Regulation S-P. The firm’s misuse of client’s personal information was directly related to its recruitment of representatives and advisers, the SEC said in its order, which was released yesterday.
In 2008, independent broker-dealer Next Financial Group Inc. was ordered by an administrative-law judge to pay a $125,000 penalty for violations of Regulation S-P.
Along with the letter, Finra sent a questionnaire asking for information about hiring bonuses. Among the questions, the regulator asked about the amount of any additional compensation, as well as how the payments were made.
Anthony Mattera, a Wells Fargo spokesman, said the inquiry “doesn’t seem to be anything other than routine.” It could be “part of a routine exam or industry sweep,” he said.
Finra spokesman Herb Perone declined to comment on whether the investigation is isolated to Wells Fargo or is broader.