The Financial Industry Regulatory Authority (FINRA) has fined Wells Fargo Advisers $1 million for failing to timely deliver prospectuses to approximately 934,000 customers who bought mutual funds in 2009, according to an InvestmentNews article entitled “Wells took up to 153 days to get prospectuses to mutual fund buyers: Finra.”
Securities laws require delivery of prospectuses within three days of the purchases, according to FINRA. Well Fargo took as long as 153 days to provide prospectuses, and further did not report customer complaints and arbitration claims involving some of its representatives within 30 days of the occurrence, as required by FINRA rules, according to the article, citing FINRA.
In addition, Wells Fargo reportedly failed to take corrective action after learning that as many as 9 percent of customers had not received prospectuses within three days.
“Mutual fund prospectuses contain key information about a fund’s performance, risks, strategies and costs,” Brad Bennett, FINRA’s enforcement chief, was quoted as saying, adding: “Wells Fargo ignored reports alerting them to serious problems with its prospectus delivery system and, as a result, its customers were deprived of valuable information.”
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