The Financial Industry Regulatory Authority has fined 12 companies a total of $14.4 million for significant deficiencies relating to the preservation of broker/dealer and customer records in a format that prevents alteration.
FINRA stated that at various times, and in most cases for prolonged periods, the companies failed to maintain electronic records in "write once, read many," or WORM, format, which prevents the alteration or destruction of records stored electronically.
Wells Fargo Securities LLC and Wells Fargo Prime Services LLC were jointly fined $4 million. RBC Capital Markets LLC and RBC Capital Markets Arbitrage S.A. were jointly fined $3.5 million. RBS Securities Inc. was fined $2 million. Wells Fargo Advisors LLC, Wells Fargo Advisors Financial Network LLC and First Clearing LLC were jointly fined $1.5 million. SunTrust Robinson Humphrey Inc. was fined $1.5 million. LPL Financial LLC was fined $750,000. Georgeson Securities Corp. was fined $650,000, and PNC Capital Markets LLC was fined $500,000.
Federal securities laws and FINRA rules require that business-related electronic records be kept in WORM format to prevent alteration. FINRA found that each of the 12 companies had WORM deficiencies that affected millions, and in some cases hundreds of millions, of records pivotal to their brokerage businesses, spanning multiple systems and categories of records.
FINRA also found that each of the companies had related procedural and supervisory deficiencies affecting their ability to adequately retain and preserve broker/dealer records stored electronically. In addition, FINRA found that three of the companies failed to retain certain broker/dealer records that they were required to keep under applicable record retention rules.
In settling the matter, the companies neither admitted nor denied the charges, but consented to the entry of FINRA's findings.