{"id":19942,"date":"2014-09-24T21:51:28","date_gmt":"2014-09-24T19:51:28","guid":{"rendered":"http:\/\/www.w-t-w.org\/en\/?p=19942"},"modified":"2014-09-24T21:51:28","modified_gmt":"2014-09-24T19:51:28","slug":"sec-fines-wells-fargo","status":"publish","type":"post","link":"https:\/\/www.w-t-w.org\/en\/sec-fines-wells-fargo\/","title":{"rendered":"SEC Fines Wells Fargo"},"content":{"rendered":"

First ever fine for a broker-dealer failing to protect a customer\u2019s material nonpublic information.<\/p>\n

According to the SEC\u2019s order instituting a settled administrative proceeding, Wells Fargo highlighted in internal documents the risk of its personnel misusing confidential information obtained from retail customers and clients. The risk manifested itself when a Wells Fargo broker learned confidentially from his customer that Burger King was being acquired by a New York-based private equity firm. The broker then traded on that nonpublic information ahead of the public announcement. The SEC charged the broker with insider trading and obtained an asset freeze to prevent him from transferring illicit profits outside the U.S.<\/p>\n

The SEC\u2019s order finds that multiple groups responsible for compliance or supervision within Wells Fargo received indications that the broker was misusing customer information. However, these groups lacked coordination or any assigned responsibilities, and they ultimately failed to act on these indications. Federal law requires broker-dealers and investment advisers to establish, maintain, and enforce policies and procedures to prevent such misuse of material nonpublic information. Said Andrew J. Ceresney, Director of the SEC\u2019s Enforcement Division:<\/p>\n

When investors entrust private information to their stockbrokers or investment advisers, they have the right to expect that it will not be exploited. In this case \u2013 our first against a broker-dealer for failing to protect the nonpublic information conveyed by its customers \u2013 Wells Fargo failed to implement procedures to prevent misuse of such information.<\/p><\/blockquote>\n

The SEC\u2019s order also finds that when SEC investigators sought all documents related to the firm\u2019s compliance reviews of the broker\u2019s trading, Wells Fargo\u2019s document production omitted documents related to the broker\u2019s trading in Burger King stock. Six months after SEC investigators initially requested documents, Wells Fargo produced the Burger King-related review without any explanation as to why it was not produced in the first place. Furthermore, Wells Fargo failed to provide an accurate record of the review because one of the documents had been altered to include additional language before it was produced to the SEC. Said Daniel M. Hawke, Chief of the SEC Enforcement Division\u2019s Market Abuse Unit:<\/p>\n

Wells Fargo unreasonably delayed producing documents to the SEC\u2019s staff and altered a previously requested compliance document after the SEC charged a former Wells Fargo employee with insider trading. The firm\u2019s actions improperly delayed our investigation, and the production of an altered document interfered with our search for the truth.<\/p><\/blockquote>\n

The SEC\u2019s order finds that Wells Fargo violated Section 15(g) of the Securities Exchange Act of 1934 and Section 204A of the Investment Advisers Act of 1940, which require broker-dealers and investments advisers to establish, maintain, and enforce policies and procedures reasonably designed to prevent the misuse of material nonpublic information. Wells Fargo Advisors also violated Sections 17(a) and 17(b) of the Exchange Act and Rule 17a-4(j) as well as Section 204(a) of the Advisers Act, which require broker-dealers and investment advisers to promptly produce accurate books and records to the SEC. Wells Fargo admitted the findings and acknowledged its violation of the federal securities laws. In addition to the $5 million penalty, the firm agreed to retain an independent consultant to review its policies and procedures. The SEC\u2019s order censures Wells Fargo and requires the firm to cease and desist from committing or causing these violations.<\/p>\n

\"Wells<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

First ever fine for a broker-dealer failing to protect a customer\u2019s material nonpublic information. According to the SEC\u2019s order instituting a settled administrative proceeding, Wells Fargo highlighted in internal documents the risk of its personnel misusing confidential information obtained from … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":22,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"footnotes":""},"categories":[70,22,13],"tags":[],"class_list":["post-19942","post","type-post","status-publish","format-standard","hentry","category-big-banks","category-corruption","category-finance"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t