The Financial Industry Regulatory Authority (FINRA) announced on June 25 that it had fined Wachovia Securities, LLC of St. Louis $1.4 million for the firm’s failure to deliver prospectuses and product descriptions to customers who purchased various investment products from July 2003 through December 2004. FINRA also cited Wachovia for related supervisory failures.
Specifically, FINRA found widespread deficiencies relating to the delivery of prospectuses for certain classes of securities, including exchange-traded funds (ETFs), collateral mortgage obligations (CMOs), auction-rate market preferred securities, corporate debt securities, preferred stocks, mutual funds, alternative investment securities, equity syndicate initial public offerings (IPOs) and secondary purchases of equity non-syndicate initial public offerings.
FINRA’s investigation of Wachovia showed that it failed to deliver the required prospectuses to customers in approximately 6,000 of approximately 22,000 transactions occurring between July 2003 and December 2004. The market value of the 6,000 transactions was approximately $256 million, according to FINRA.
At the time the activity at issue took place, Wachovia Securities, LLC was a subsidiary and non-bank affiliate of Wachovia Corporation. On Jan. 1, 2009, Wachovia Corporation merged with Wells Fargo & Company.