Wells Fargo and LPL Financial Pay $900,000 Each for Inadequate Trading Data

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Wells Fargo and LPL Financial Pay $900,000 Each for Inadequate Trading Data

The Securities and Exchange Commission (SEC) has settled its lawsuits against Wells Fargo Clearing Services LLC and LPL Financial LLC. Both financial firms were penalized for failing to provide complete and accurate securities transaction data, also known as blue sheet data. To resolve the SEC's allegations, Wells Fargo and LPL each agreed to pay a civil monetary penalty of $900,000.

According to the SEC's findings, both Wells Fargo and LPL submitted numerous blue sheet data containing inaccurate or incomplete information about securities transactions over several years. These data also included other deficiencies, such as missing details about the firms or clients involved in these transactions.

The SEC identified that Wells Fargo had filed approximately 11,195 blue sheet notices with missing or incorrect data for at least 10.6 million total transactions. These errors stemmed from approximately 15 types of mistakes. On the other hand, LPL submitted at least 3,679 blue sheet notices with misreported or incomplete data for around 399,000 total transactions, and these errors resulted from 10 types of mistakes.

Both Wells Fargo and LPL have taken steps to rectify and improve their blue sheet reporting systems and controls. These measures included hiring external consultants to review their blue sheet reporting programs and developing relevant governance frameworks and verification procedures for blue sheet notifications. Wells Fargo identified and reported all but one of the errors affecting the blue sheet notifications.

Thomas P. Smith, Jr., Deputy Regional Director in the New York Regional Office, emphasized the importance of providing the SEC with accurate and complete blue sheet data for investor protection and the detection of improper conduct. He also highlighted the benefits of self-reporting, remediation, and cooperation when firms detect violations.

The SEC's decisions found that both Wells Fargo and LPL violated the broker-dealer recordkeeping and reporting provisions of federal securities laws. Both firms accepted the findings in the relevant orders and agreed to the censure and to pay a penalty of $900,000 each.

In a separate but related matter, the Financial Industry Regulatory Authority (FINRA) also reached a settlement with Wells Fargo and LPL for similar conduct.