FINRA Fines Wells Fargo with $75,000

​According to the latest news, Wells Fargo Clearing Services, LLC has agreed to pay a fine of $75,000 as a part of a settlement of the alleged rule violations with the United States Financial Industry Regulatory Authority (FINRA).

Information updated on the FINRA's website shows that from October 1, 2016, through June 12, 2018, Wells Fargo failed to make accurate order memoranda in violation of Rule 17a-3(a)(6) under the Securities Exchange Act of 1934 and FINRA Rules 4511 and 2010, and transmitted inaccurate reports to the Order Audit Trail System (OATS) in violation of FINRA Rules 7450 and 2010.

From October 1, 2016, through June 12, 2018, Respondent failed to make and preserve accurate books and records as prescribed by Exchange Act Rule 17a-3(a)(6) and FINRA Rule 4511. Specifically, the firm failed to record an accurate order receipt time in certain situations when registered representatives entered the order receipt time manually. Generally, orders were entered into the firm's system immediately upon receipt from the customer, and the system automatically appended the order receipt time and order entry time to the order record. In some instances, when the order was not immediately entered into the firm's system, the registered representative first had to record the order on paper, and then enter all the terms and conditions, including manually entering the order receipt time, into the system. The most common examples of these instances occurred when large orders required approval, or other unique situations where, after receiving the order from the customer, the registered representative had to seek approval from his or her manager or others before entering the order into the firm's system. In these instances, some registered representatives entered inaccurate order receipt times into the firm's system.

Wells Fargo's registered representatives entered inaccurate order receipt times in different ways. Although OATS requires reporting in eastern military time, some of the firm's registered representatives entered order times reflecting another time zone or in 12-hour time. In addition, some of Wells Fargo's registered representatives entered orders with "00" seconds in the time stamp when "00" seconds was inaccurate.

Wells Fargo recorded inaccurate order receipt times on 114,394 order memoranda.

In addition, Wells Fargo populated the order receipt time field in its OATS submissions with the time that was entered in its order management system. Thus, the inclusion of inaccurate receipt times in Wells Fargo's system also caused the firm to submit 114,394 inaccurate submissions to OATS.

As a result, Wells Fargo received a censure and a fine of $75,000 from FINRA. On top of the fine, the firm has agreed to a censure.