On May 5, 2011, FINRA announced that it fined Wells Fargo Advisors LLC $1 million for its failure to deliver prospectuses to customers purchasing mutual funds in 2009 and for delays in reporting material information, including arbitrations and complaints, about its current and former representatives. Federal securities laws require that a prospectus be delivered to a customer within three days of the purchase of a security. FINRA found that during 2009, Wells Fargo delivered late prospectuses to more than 900,000 customers, with delays ranging between one and 153 days. Moreover, FINRA determined that Wells Fargo failed to take any corrective action despite receiving reports from a third party service provider that prospectuses were not being timely delivered.
FINRA also found that Wells Fargo had failed to promptly report changes to or update information contained in its representatives’ applications for registration (Form U-4) and representatives’ termination notices (Form U-5). Specifically, FINRA found that from July 1, 2008 to June 30, 2009, 8.1% of the Form U-4 amendments and 7.6% of the Form U-5 amendments filed by Wells Fargo were not timely filed.