Wells Fargo Subsidiaries Reach Settlement Over Investment Advice
September 02 2020 - 1:05PM
Dow Jones News
By Matt Grossman
Wells Fargo & Co. subsidiaries will pay $1.4 million in
restitution to customers and $675,000 in fines for failing to
properly supervise the investment advice they provided for some
transactions, the Financial Industry Regulatory Authority said
Wednesday.
The restitution and penalties relate to the way that Wells Fargo
Clearing Services LLC and Wells Fargo Advisors Financial Network
LLC communicated to customers about switching from variable
annuities to products such as mutual funds or investment
trusts.
Wells Fargo procedures required supervisors to review advice
about switches and compare the costs and benefits to customers, but
supervisors didn't always obtain sufficient data to complete those
reviews, Finra said. Wells Fargo also failed to send letters about
the switches to clients, which would have helped ensure that
customers understood the transactions, Finra said.
The issues included 101 potentially problematic transactions
between 2011 and 2016, Finra said. In some cases, Wells Fargo
recommended switches that resulted in customers' paying fees and
earning less annual income.
Wells Fargo didn't admit or deny the charges in the settlement,
according to Finra. Starting in 2016, the Wells Fargo subsidiaries
improved the way they supervise switch recommendations, Finra
said.
"At Wells Fargo Advisors we take our supervisory
responsibilities seriously," a spokeswoman for Wells Fargo said.
"We are pleased to have this matter behind us."
Write to Matt Grossman at matt.grossman@wsj.com
(END) Dow Jones Newswires
September 02, 2020 12:50 ET (16:50 GMT)
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