Three big securities broking companies have been ordered to return money to the tune of over $30 million to the customers. It was a collective amount and not an individual one. The firms included Wells Fargo & Co (NYSE:WFC), Raymond James, and LPL. The Financial Industry Regulatory Authority or FINRA gave its order against these three companies.
Failing To Waive
The FINRA ruled that Wells Fargo & Co (NYSE:WFC) and the other two brokerages have failed to waive sales charges of mutual fund for thousands of accounts. Those accounts belonged to the retirement investors, as well as, the charities. The regulator blamed these three financial institutions for their failure to supervise adequately. The amount ordered to be reimbursed cannot be called as fine.
These three brokerages have neither denied nor admitted the allegations of the regulator. The total amount might be smaller for the companies as a whole. However, for the particular division, the amount could reduce their profitability to some extent.
Fines Not Slapped
Wells Fargo & Co (NYSE:WFC), Raymond James, and LPL might have escaped the wrath of the regulator. Part of the reason was that both Raymond James, as well as, LPL disclosed that they have reported the issue by themselves to the regulator. FINRA also saw the brokerage firms’ action as an extraordinary cooperation.
However, Wells Fargo & Co (NYSE:WFC) refused to discuss the matter with press. FINRA disclosed that the errors involved a total of over 50,000 accounts from these three securities brokerage firms.
As a result of tough competitive environment, there is a strong pressure on the financial institutions’ executives to rope in more customers. In the process, some of them commit errors. While some of them report to the regulator for rectification, others wait till someone rake up the issue. In any case, the amount will not have any significant impact on these three brokerages performance.
Wells Fargo & Company, incorporated on January 24, 1929, is a financial and bank holding company. Its principal business is to act as a holding company for its subsidiaries. The Company is a diversified financial services company. It has three operating segments: Community Banking, Wholesale Banking and Wealth and Brokerage and Retirement. The Company provides retail, commercial and corporate banking services through banking stores and offices, the Internet and other distribution channels to individuals, businesses and institutions in all around 50 states, the District of Columbia and in other countries. The Company provides other financial services through subsidiaries engaged in various businesses, principally wholesale banking, mortgage banking, consumer finance, equipment leasing, agricultural finance, commercial finance, securities brokerage and investment banking, insurance agency and brokerage services, computer and data processing services, trust services, investment advisory services, mortgage-backed securities servicing and venture capital investment. As of December 31, 2014, the Company had assets of $1.7 trillion, loans of $863 billion and deposits of $1.2 trillion
Community Banking
The Community Banking segment offers a line of diversified financial products and services for consumers and small businesses, including checking and savings accounts, credit and debit cards, and auto, student and small business lending. Its products also include investment, insurance and trust services in around 39 states and District of Columbia and mortgage and home equity loans in all around 50 states and District of Columbia through its Regional Banking and Wells Fargo Home Lending business units. The Community Banking segment also includes the results of its Corporate Treasury activities net of allocations in support of the other operating segments and results of investments in its affiliated venture capital partnerships.
Wholesale Banking
The Wholesale Banking segment provides financial solutions to businesses across the United States and globally. Its products and business segments include Middle Market Commercial Banking, Government and Institutional Banking, Corporate Banking, Commercial Real Estate, Treasury Management, Wells Fargo Capital Finance, Insurance, International, Real Estate Capital Markets, Commercial Mortgage Servicing, Corporate Trust, Equipment Finance, Wells Fargo Securities, Principal Investments, Asset Backed Finance and Asset Management.
Wealth, and Brokerage and Retirement
The Wealth, and Brokerage and Retirement segment provides a range of financial advisory services. Wealth Management provides clients with a range of wealth management solutions, including financial planning, private banking, credit, investment management and fiduciary services. Abbot Downing, a Wells Fargo business, provides wealth management services to families and individuals, as well as endowments and foundations. Brokerage serves customers’ advisory, brokerage and financial needs in the United States. Retirement provides institutional retirement and trust services for businesses and reinsurance services for the life insurance industry.
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