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


(END) Dow Jones Newswires

September 02, 2020 12:50 ET (16:50 GMT)

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