Wells Fargo fined by Finra for not providing sales charge discounts

By Angela McDaniels

Tacoma, Wash., Dec. 15 - The Financial Industry Regulatory Authority fined Wells Fargo Investments, LLC for failing to provide sales charge discounts on unit investment trust transactions to eligible customers, according to a Finra news release.

The fine, $2 million, is also for unsuitable sales of reverse convertible securities.

As part of the settlement, the firm is required to pay restitution to customers who did not receive UIT sales charge discounts.

Finra also found that Wells Fargo failed to provide certain eligible customers with breakpoint and rollover and exchange discounts in their sales of UITs because the firm had insufficient systems and procedures to ensure that UIT customers received discounts for which they were entitled.

UITs offer sales charge discounts on purchases that exceed certain thresholds ("breakpoints") or involve redemption or termination proceeds from another UIT during the initial offering period, Finra noted. Between January 2006 and July 2008, Wells Fargo failed to provide certain eligible customers with these breakpoint and rollover and exchange discounts, according to the release.

Wells Fargo consented to the entry of Finra's findings, but it did not admit or deny the charges.

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