WASHINGTON — The Financial Industry Regulatory Authority fined Wells Fargo Securities $12,500 for trade reporting violations and barred an individual from the securities industry for allowing the fraudulent transfer of $160,000 from a customer to an unrelated third party.
The cases, along with a previously published one involving a $675,000 fine against two Morgan Stanley divisions, were detailed in FINRA's June disciplinary report.
The fine against Charlotte, N.C.-based Wells Fargo resulted from the dealer's failure to report trade information on the Real-time Transaction Reporting System within 15 minutes of execution.
FINRA found that, from July 1, 2013 through Sept. 30, 2013, Wells Fargo Securities failed to disclose trade information on time for 184 transactions, about 2.3% percent of its total transactions on RTRS during the review period.
The failures put Wells Fargo Securities in violation of MSRB Rule G-14 on trade reporting, FINRA said.
Wells Fargo agreed to the censure and fine without admitting or denying the findings. Several Wells Fargo spokespersons could not be reached for comment.
FINRA also brought a separate and unrelated action against David Paul Santos from Niskayuna, N.Y., who at the time of his violation worked for Cetera Investment Services, LLC in Troy, N.Y. The firm terminated his employment on May 12, 2014.
The authority barred Santos from associating with any FINRA member in any capacity after he falsified a client's signature 10 different times on letters of authorization, as well as his client's wife's signature on three. The LOAs allowed $160,000 from his client's joint brokerage account to transfer to a third-party bank account that had no ties to the client.
Santos separately executed 12 trades in the client's brokerage account, which he did not have the authority to do, so he could pay for the wiring fees. He received $256.69 in commissions from the brokerage transactions and misfiled them as unsolicited, when they were actually solicited.
The events leading to the transgressions began Feb. 12, 2014, when Santos received a fake email from someone who hacked into his client's email address. The hacker asked Santos to wire funds to a third party bank account that was not tied to either Santos' client or his client's wife.
Santos' firm required him to have a signed letter of authorization from his client before processing such a wire and when Santos informed the imposter of that fact, the imposter told him to process the wire without a signature. Santos followed the instructions and attached previous client signatures to LOAs over a period of time stretching until April 8, 2014.
FINRA said Santos violated its Rules 4511 and 2010, as well as MSRB Rules G-17 on fair dealing, and G-8, on books and records.
Santos accepted the bar without confirming or denying the findings. His firm recovered a portion of the transferred funds and was able to reimburse the couple in full.
Santos's attorney could not be reached for comment.
