The US Securities and Exchange Commission (SEC) has announced settlements with Wells Fargo Clearing Services LLC and LPL Financial LLC over failures to provide accurate and complete securities trading data, also known as blue sheet data, to the SEC. Both firms have agreed to pay $900,000 in civil penalties to resolve the charges.
The SEC’s orders reveal that over several years, both Wells Fargo and LPL submitted numerous inaccurate or incomplete blue sheets regarding securities transactions. These errors included missing or incorrect data about the transactions, as well as deficiencies concerning the firms or customers involved.
SEC Settlements with Wells Fargo and LPL Financial
For Wells Fargo, the SEC’s order identifies around 15 types of errors across 11,195 blue sheet submissions, resulting in at least 10.6 million transactions with incomplete or inaccurate information. LPL, meanwhile, faced errors stemming from 10 types of issues, leading to 3,679 blue sheet submissions containing missing or misreported data for approximately 399,000 transactions.
Both firms took remedial actions to address their reporting deficiencies, including hiring external consultants to review and improve their blue sheet submission systems. They also strengthened their governance frameworks and validation procedures. Wells Fargo is for self-identifying and self-reporting most of its errors, except for one.
The SEC found that both firms violated federal securities laws related to broker-dealer recordkeeping and reporting. In addition to the civil penalties, Wells Fargo and LPL have each been censured, admitting the findings in the SEC’s orders.
In a separate development, the Financial Industry Regulatory Authority (FINRA) reached settlements with Wells Fargo and LPL for related conduct. These settlements mark a significant enforcement action in ensuring that financial firms maintain accurate reporting standards.
Both companies have taken steps to correct their reporting deficiencies and improve their internal controls. These actions serve as a reminder to other financial institutions of the serious consequences of failing to meet regulatory standards, reinforcing the SEC’s commitment to ensuring transparency and accountability in the markets.
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