Massachusetts Secretary of the Commonwealth William F. Galvin fined Wells Fargo $450,000 after more than 1,000 Wells Fargo agents there lapsed in completing mandated state registrations, according to an offer of settlement signed by the bank.
The consent order, which was signed and submitted by Wells Fargo on Aug. 22, found that between Jan. 1, 2016, and June 28, 2018, 561 Massachusetts-based Wells Fargo agents that were supervising one or more agents, and 1,098 Wells Fargo agents in total “had a lapse in Massachusetts registration for some period” (there are more than 9,400 Wells Fargo agents registered in the state, according to the order).
Wells Fargo’s supervisory policies mandate both supervisors and agents needed to be properly registered as regulated by that state’s regulatory policy. In fact, in April 2016, the bank started compiling data on Massachusetts-based Wells Fargo supervisors not properly registered. In October of that year, they added a particular provision requiring supervisors to be registered if they supervise agents in Massachusetts, according to the order. Additionally, the offer of settlement states that the Office of the Commonwealth’s Securities Division informed Wells Fargo that supervisors operating in Massachusetts must be registered as agents at least 159 times between Jan. 1, 2017 and July 31, 2018.
Wells Fargo Advisors SVP for Communications Shea Leordeanu said the firm was “pleased to have resolved this matter with the Massachusetts Securities Division." Wells Fargo has also agreed to register its agents in the state and conduct a review to bolster its own policies that pertain to how agents register.
Registrations in the state expire at the close of each year, and while Wells Fargo included news about registration renewal periods in weekly newsletters, it was “often embedded at the bottom of the emailed newsletters in boxes with inconsistent labels from week to week and in sections not related to registration obligations,” according to the order. The order also asserted that two Wells Fargo agents relied on assistants to renew registrations, which did not occur.
Galvin’s office has made several moves in regard to investor protections this summer. In June, the state fined LPL Financial for failing to properly register 651 financial advisors, asserting the firm also did not notify regulators of mandatory reportable misconduct by those brokers. That same month, Galvin announced his office was seeking public comments on potential regulations to introduce a statewide fiduciary standard (Galvin criticized the Securities and Exchange Commission’s Regulation Best Interest rule for failing to enact a fiduciary standard for broker/dealers). Last year, Galvin announced his office would be investigating Wells Fargo for potential customer abuses by its brokerage division.
