SEC Settles Charges Against Wells Fargo and LPL Financial

The Securities and Exchange Commission (SEC) has settled charges against Wells Fargo Clearing Services LLC and LPL Financial LLC. Both firms were penalized for not providing complete and accurate securities trading data, known as blue sheet data, to the SEC. To resolve the SEC's charges, each firm has agreed to pay a civil penalty of $900,000.

Details of the Violations

The SEC's orders state that both Wells Fargo and LPL submitted numerous blue sheet data reports over several years that contained inaccurate or missing information about securities transactions. This data had various deficiencies, including missing details about the firms or customers involved in these transactions.

• Wells Fargo: Submitted around 11,195 blue sheet submissions with missing or inaccurate data for at least 10.6 million transactions, resulting from about 15 types of mistakes.
• LPL Financial: Submitted at least 3,679 blue sheet submissions with misreported or missing data for around 399,000 transactions, arising from 10 types of errors.

Steps Taken to Improve Reporting

Both firms have taken steps to correct and enhance their blue sheet reporting systems and controls. This includes:
– Hiring outside consultants to review their blue sheet reporting programs.
– Enhancing governance frameworks and validation procedures for blue sheet submissions.
– Wells Fargo self-identified and self-reported all but one of its errors.

Importance of Accurate Data

Thomas P. Smith, Jr., Associate Regional Director in the New York Regional Office, underlined the importance of providing accurate blue sheet data to the SEC for investor protection and wrongdoing detection. He highlighted the benefits of self-reporting, remediation, and cooperation when firms detect violations.

Conclusion

The SEC found that both Wells Fargo and LPL violated broker-dealer recordkeeping and reporting provisions of the federal securities laws. Both firms admitted the findings in the respective orders, agreed to be censured, and will each pay a $900,000 penalty.

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

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