The Former Wachovia Units Are Fined Over Notification Failures

Two former Wachovia subsidiaries have been fined $1.1 million after an investigation by the Financial Industry Regulatory Authority (Finra) found that computer programming problems at the firms led to them failing to issue over 800,000 required customer notifications. Finra said

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Two former Wachovia subsidiaries have been fined $1.1 million after an investigation by the Financial Industry Regulatory Authority (Finra) found that computer programming problems at the firms led to them failing to issue over 800,000 required customer notifications.

Finra said that the computing and operational failures at Wachovia Securities and First Clearing, which occurred over a five-year period ending in 2008, went undetected because the firms had not implemented proper internal controls or testing.

The organization noted that the companies failed to issue over 300,000 notifications of changes in investment objectives and around 340,000 notifications of changes of address.

As part of the settlement, both firms are required to employ an independent consultant to review their supervisory processes.

Finra’s executive vice-president and chief of enforcement Susan Merrill said it is “crucial” for companies to meet their notification obligations.

“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.

North Carolina-based Wachovia was taken over by Wells Fargo in December 2008.

D.C.

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