FINRA Fines Wells Fargo $1 Million for Delayed Prospectus Delivery
The Financial Industry Regulatory Authority (FINRA) and Wells Fargo & Company have reached a settlement agreement for $1 million to settle claims that the St, Louis based brokerage firm failed to provide prospectuses to clients who purchased mutual funds in 2009, according to Bloomberg and a FINRA News Release.
FINRA said that Wells Fargo Advisers violated securities laws by failing to deliver prospectuses to customers within three days from the date of purchase of mutual funds. In fact, FINRA claimed that its investigation revealed that the firm took as long as 153 days to send out the prospectuses, in addition to failing to report information including arbitrations and complaints involving some representatives. Even after getting reports from the contracting firm hired to deliver the prospectuses saying that as many as 9% of the customers had not gotten them within the three day time period, the company failed to take any corrective action to alleviate the problem depriving customers of valuable information about the mutual fund’s performance, risks, investment strategies and costs.