Washington D.C., Jan. 17, 2025: The Securities and Exchange Commission today announced settled charges against registered investment advisers Wells Fargo Clearing Services LLC and Wells Fargo Advisors Financial Network LLC (collectively Wells Fargo Advisors) and against Merrill Lynch, Pierce, Fenner & Smith Incorporated (Merrill Lynch) for failing to adopt and implement written policies and procedures reasonably designed to prevent violations of the Advisers Act and the rules thereunder relating to the firms\u2019 cash sweep programs. The firms agreed to settle the SEC\u2019s charges and pay $60 million in total civil penalties.<\/p>\n
According to the SEC\u2019s orders, Wells Fargo Advisors and Merrill Lynch offered bank deposit sweep programs (BDSPs) as the only cash sweep option for most advisory clients and received a significant financial benefit from advisory client cash in the BDSPs. The orders find that these firms or their affiliates set the interest rates offered in the BDSPs and that, during periods of rising interest rates, the yield differential between the BDSPs and other cash sweep alternatives at times grew to almost 4 percent. According to the orders, Wells Fargo Advisors and Merrill Lynch failed to adopt and implement reasonably designed policies and procedures (1) to consider the best interests of clients when evaluating and selecting which cash sweep program options to make available to clients, including during periods of rising interest rates, and (2) concerning the duties of financial advisors in managing client cash in advisory accounts. <\/p>\n
\u201cCash sweep programs impact nearly all advisory clients, who often pay advisory fees on assets held in these accounts,\u201d said Sanjay Wadhwa, Acting Director of the SEC\u2019s Division of Enforcement. \u201cThese actions reinforce that advisory firms must have reasonably designed policies and procedures to consider their clients\u2019 best interest when evaluating potential sweep options for cash held in advisory accounts and to ensure that cash held in an advisory account is properly managed by financial advisers consistent with a client\u2019s investment profile.\u201d<\/p>\n
Without admitting or denying the SEC\u2019s findings, Wells Fargo Clearing Services, Wells Fargo Advisors Financial Network, and Merrill Lynch consented to the entry of orders finding that they violated the Advisers Act and ordering them to be censured and to cease and desist from violating the charged provisions. Wells Fargo Clearing Services agreed to pay a civil penalty of $28 million; Wells Fargo Advisors Financial Network agreed to pay a civil penalty of $7 million; and Merrill Lynch agreed to pay a civil penalty of $25 million.<\/p>\n
The SEC\u2019s investigations were conducted by John Mulhern of the Division of Enforcement\u2019s Asset Management Unit and Min Choi and Jonathan Shapiro of the Division of Enforcement\u2019s Complex Financial Instruments Unit, with assistance from David Mendel and James Carlson, under the supervision of Kimberly Frederick, Corey Schuster, and Reid Muoio.<\/p>\n
MyPR International Press Releases<\/p>","protected":false},"excerpt":{"rendered":"
Washington D.C., Jan. 17, 2025: The Securities and Exchange Commission today announced settled charges against registered investment advisers Wells Fargo Clearing Services LLC and Wells Fargo Advisors Financial Network LLC (collectively Wells Fargo Advisors) and against Merrill Lynch, Pierce, Fenner & Smith Incorporated (Merrill Lynch) for failing to adopt and implement written policies and procedures …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","autoblue_enabled":true,"autoblue_custom_message":"","autoblue_shares":[],"autoblue_post_url":"","autoblue_publish_document":false,"republication-tracker-tool-hide-widget":false,"footnotes":""},"categories":[3],"tags":[],"class_list":["type-post","category-news","entry"],"acf":[],"_links":{"self":[{"href":"https:\/\/mypr.co.za\/mail\/wp-json\/wp\/v2\/posts\/270","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mypr.co.za\/mail\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mypr.co.za\/mail\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mypr.co.za\/mail\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mypr.co.za\/mail\/wp-json\/wp\/v2\/comments?post=270"}],"version-history":[{"count":0,"href":"https:\/\/mypr.co.za\/mail\/wp-json\/wp\/v2\/posts\/270\/revisions"}],"wp:attachment":[{"href":"https:\/\/mypr.co.za\/mail\/wp-json\/wp\/v2\/media?parent=270"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mypr.co.za\/mail\/wp-json\/wp\/v2\/categories?post=270"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mypr.co.za\/mail\/wp-json\/wp\/v2\/tags?post=270"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}