Investing.com -- The Securities and Exchange Commission (SEC) has settled charges against Wells Fargo (NYSE:WFC) Clearing Services LLC and LPL Financial (NASDAQ:LPLA) LLC. Both financial firms were penalized for not providing complete and accurate securities trading data, also known as blue sheet data, to the SEC. To resolve the SEC's charges, Wells Fargo and LPL have each agreed to pay a civil penalty of $900,000.
The SEC's orders state that both Wells Fargo and LPL submitted numerous blue sheet data over several years that contained inaccurate or missing information about securities transactions. This data also had other deficiencies, including missing information about the firms or customers involved in these transactions.
The SEC found that Wells Fargo made around 11,195 blue sheet submissions with missing or inaccurate data for at least 10.6 million total transactions. These errors were the result of approximately 15 types of mistakes. LPL, on the other hand, made at least 3,679 blue sheet submissions with misreported or missing data for around 399,000 total transactions, resulting from 10 types of errors.
Both Wells Fargo and LPL have taken steps to correct and improve their blue sheet reporting systems and controls. These measures included hiring outside consultants to review their blue sheet reporting programs, as well as enhancing their respective governance frameworks and validation procedures for blue sheet submissions. Wells Fargo self-identified and self-reported all but one of the errors affecting its blue sheet submissions.
Thomas P. Smith, Jr., Associate Regional Director in the New York Regional Office, emphasized the importance of providing accurate and complete blue sheet data to the SEC for the protection of investors and detection of wrongdoing. He also pointed out the benefits of self-reporting, remediation, and cooperation when firms detect violations.
The SEC orders found that Wells Fargo and LPL violated the broker-dealer recordkeeping and reporting provisions of the federal securities laws. Both firms admitted the findings in the respective orders and agreed to be censured and each pay a $900,000 penalty.
In a separate but related matter, the Financial Industry Regulatory Authority (FINRA) also reached settlements with Wells Fargo and LPL for similar conduct.
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