Wells Fargo, LPL Financial Fined $900K Each for Inaccurate Reporting

Two major broker-dealers, Wells Fargo Clearing Services and LPL Financial, have each been censured and fined $900,000 by the Financial Industry Regulatory Authority for submitting inaccurate trade data through thousands of “blue sheets,” an automated format used by FINRA, the U.S. Securities and Exchange Commission, and other regulators to investigate potential trading violations.

According to FINRA, from at least 2011 through February 2023, Wells Fargo Clearing Services submitted approximately 22,000 blue sheets to FINRA that inaccurately reported one or more of 10 types of transaction information. Collectively, the firm failed to include required transactions or transaction information, or included incorrect information for approximately 5.5 million transactions. FINRA did say that Wells Fargo initially disclosed three separate software coding errors that caused the firm to misreport the exchange where trades were executed and to misidentify the registered representative for trades.

Similarly, FINRA reported that from February 2010 through July 2021, LPL submitted approximately 5,800 blue sheets to FINRA that inaccurately reported one or more of 12 types of transaction information. Collectively, LPL failed to include required transactions or transaction information, or included incorrect information, for approximately 205,000 transactions. According to FINRA, LPL disclosed to FINRA four of these types of errors in January 2017, but the remainder of the errors were discovered during the course of FINRA’s investigation by LPL with the assistance of a third-party consultant. FINRA also stated that LPL has since remediated its errors and amended and resubmitted the impacted blue sheets to FINRA.

With these oversights, the firms both violated FINRA Rules 8211 and 8213 which require that member firms submit trade data to FINRA upon request. A violation of those rules also constitutes a violation of Rule 2010, which requires member firms to uphold high standards of honor and just practices.

Without admitting or denying FINRA’s findings, both firms agreed to a censure and a $900,000 fine.

This is not the first time either industry giant has faced regulatory action. In May of this year, LPL reached a $50 million settlement with the SEC for off-channel communications, and, around this time last year, the company was fined $5.5 million by FINRA for failing to supervise direct business transactions.

In September 2024, FINRA sanctioned Wells Fargo Clearing Services nearly $3 million for short-term trading abuses.

Wells Fargo Clearing Services is headquartered in St. Louis and engages in a general securities business, among others. The firm has approximately 19,000 registered representatives working in approximately 5,000 branches.

Headquartered in San Diego, LPL Financial Holdings Inc. serves nearly 23,000 financial advisers, including advisers at approximately 1,100 enterprises and 570 registered investment adviser firms nationwide.

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