6.25.2009 The Financial Industry Regulatory Authority (FINRA) announced that it has fined Wachovia Securities $1.4 million for prospectus delivery failures and related supervisory violations. FINRA found widespread deficiencies relating to the delivery of prospectuses in connection with certain classes of securities: exchange-traded funds, collateral mortgage obligations, auction market preferred securities, corporate debt securities, preferred stocks, mutual funds, alternative investment securities, equity syndicate initial public offerings and secondary purchases of equity non-syndicate initial public offerings.
FINRA’s investigation showed that the firm failed to deliver the required prospectuses to customers in approximately 6,000 of approximately 22,000 transactions effected between July 2003 and December 2004. The market value of these 6,000 transactions was approximately $256 million.
The firm’s failures to deliver prospectuses resulted from multiple causes, including coding errors, failures by certain business units to notify the firm’s operations department that a prospectus was required to be delivered, and a failure to monitor and supervise the activities of its outside vendor contracted to deliver the prospectuses. FINRA also found that Wachovia Securities had failed to have adequate supervisory systems and policies and procedures in place to ensure that customers who purchased these investment products received prospectuses.
Click http://www.finra.org/Newsroom/NewsReleases/2009/P119052 to access the press release about the FINRA action.