Securities Industry Commentator by Bill Singer, Esq

November 13, 2017

In the Matter of Wells Fargo Advisors, LLC, Respondent (Securities and Exchange Commission Order Instituting Administrative And Cease-And-Desist Proceedings, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order / November 13, 2017) 

In anticipation of the institution of proceedings by the Securities and Exchange Commission ("SEC") but without admitting or denying the findings, Wells Fargo Advisors, LLC submitted an Offer of Settlement, which the federal regulator accepted. As set forth in the "Summary" portion of the SEC Order:

These proceedings arise out of Wells Fargo Advisors' failure to file or timely file a number of Suspicious Activity Reports ("SARs") from approximately March 2012 through June 2013. The majority of these failures involved the failure to timely file SARs on ongoing suspicious activity that continued after an initial SAR filing by Wells Fargo Advisors on related suspicious activity. At the time, Wells Fargo Advisors' anti-money laundering ("AML") policies and procedures required the filing of SARs pursuant to the requirements of the Bank Secrecy Act ("BSA"), including the filing of SARs related to continuing suspicious activity. Despite these requirements, Wells Fargo Advisors failed to file or timely file at least 50 SARs, a majority of which related to continuing suspicious activity occurring in accounts held at Wells Fargo Advisors' U.S. branch offices that focused on international customers. By failing to file or timely file SARs as required, Wells Fargo Advisors willfully violated Section 17(a) of the Exchange Act and Rule 17a-8 thereunder.

Wells Fargo voluntarily undertakes within one year the following:

(a) Conduct, or cause to be conducted, a review of the policies, procedures and practices for the identification, evaluation, and reporting of suspicious activity related to accounts of Wells Fargo Advisors, as conducted by the designated AML financial crimes investigations unit ("FCI") to determine whether AML investigative staff have sufficient time and resources to research account activity, formulate conclusions and timely file SARs;

(b) As a result of the review, update the internal policies, procedures and practices relating to the identification, evaluation and reporting of suspicious activity related to accounts at Wells Fargo Advisors;

(c) Provide additional training with respect to the appropriate determination of when to file SARs on suspicious activity to AML investigations staff within FCI who are responsible for conducting suspicious activity investigations and filing SARs relating to accounts at Wells Fargo Advisors; and

(d) Certify, in writing to the Commission staff its compliance with the undertakings set forth above. . .

In addition to ordering a Cease-And-Desist and Censure, the SEC imposed a $3.5 million civil money penalty. READ the FULL TEXT SEC ORDER.

Reflections on the Past, Present, and Future of the SEC's Enforcement of the Foreign Corrupt Practices Act (Speech
Steven R. Peikin, Co-Director, Enforcement Division at 
New York University School of Law, New York, NY)

California Denies Expungement Of NASD And Ohio Regulatory Disclosures

In today's Blog, publisher Bill Singer, Esq. attempts to tackle a recent California case in which a former NASD-registered stockbroker sought the expungement of language from his BrokerCheck file.  It's a fascinating case because FINRA didn't exist and BrokerCheck didn't exist when the stockbroker left the industry. The Plaintiff feels aggrieved by FINRA's posting on its BrokerCheck website of his alleged regulatory history and asked the court to expunge it.