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Finra Fines 12 Firms Over Record Protection

By Alex Padalka December 22, 2016

Twelve firms are on the hook for $14.4 million to Finra over allegations that they failed to use the correct electronic file format for storing records.

Finra says that for prolonged periods of time, the firms — among them Wells Fargo Advisors and LPL Financial — didn’t use the “write once, read many,” or WORM, format to preserve broker-dealer and customer records, according to a press release from the regulator. The format protects electronic files from alteration or destruction and is required by federal securities laws and Finra regulations for securely storing electronic records, according to the regulator.

The SEC has also said that the format is essential for investor protection, as it lets regulators monitor financial firms’ compliance with securities laws while protecting data against hacking attacks, Finra says in its press release.

The regulator also says that, in some cases, “WORM deficiencies” affected hundreds of millions of brokerage records across various systems and categories.


In addition, Finra alleges that all of the firms lacked adequate supervisory procedures for electronically storing broker-dealer records. Three of the firms also allegedly failed to retain some broker-dealer records that they were required to, the regulator says in its press release. Finra doled out fines ranging from $500,000 to $4 million, some of them jointly, to five companies affiliated with Wells Fargo, two firms affiliated with RBC, LPL Financial, RBS Securities, SunTrust Robinson Humphrey, Georgeson Securities Corporation and PNC Capital Markets.