Two former Wachovia units have been fined $1.1 million by the Financial Industry Regulatory Authority (Finra) after computer programming problems meant they failed to provide more than 800,000 required notifications to customers.
Finra says that, over a five year period ending in 2008, Wachovia Securities and First Clearing failed to deliver over 300,000 notifications of changes in investment objectives and approximately 340,000 of changes of address.
In addition, First Clearing failed to send notifications of the existence of clearing agreements to over 54,000 customers and required margin disclosure statements to more than 50,000.
First Clearing also failed to provide customers with trade confirmations for certain bond transactions that accurately reflected the ratings as well as required information to holders of certain debt and notifications about certain asset transfers.
The regulator says the failures were the result of various computer programming and operational problems that went undetected by internal controls procedures and supervisors.
As well as the fine, the settlement requires both firms to retain an independent consultant to review their supervisory systems and processes.
"These notices are an important form of investor protection - they help protect against changes that are erroneous, unauthorized, or, in the worst case, indicative of an effort to conceal misconduct involving a customer's account," says Susan Merrill, chief of enforcement, Finra. "It is crucial that firms meet their customer notification obligations."
Wachovia Securities and First Clearing neither admitted nor denied the charges, but consented to Finra's findings.
Wachovia was acquired by Wells Fargo in December.