Wells Fargo Securities LLC has agreed to pay a fine of $50,000 to settle allegations about Cboe Exchange rule violations.
The matter originated from a quarterly review conducted by FINRA’s Department of Market Regulation regarding ’s compliance with its obligations to report certain options positions and related information to the Large Options Position Report (LOPR).
From November 7, 2014 through May 31, 2019, due to a programming error within the system at the firm’s third-party LOPR service provider, Wells Fargo overreported positions to the LOPR that underwent exercise or assignment prior to expiration in approximately 626 instances.
From May 31, 2019, through November 15, 2019, Wells Fargo’s remediation of a prior system error caused the Firm to erroneously delete reportable equity options positions that were exercised or assigned on expiration in approximately 4,184 instances.
From February 13, 2015, through January 13, 2020, due to another issue within the system at the Firm’s third-party LOPR service provider. Wells Fargo erroneously deleted reportable index option positions in approximately 8,408 instances on expiration. An incorrect configuration in the third-party LOPR service provider’s options assignment system caused Wells Fargo to submit a delete record to the LOPR after the assignment or exercise of an in-the-money index option at expiration.
From November 7, 2014, through December 31, 2020, Wells Fargo reported to the LOPR certain positions as both long and short, when those positions should have been netted. This occurred when the Firm facilitated client trades and those trades were left overnight in an average price facilitation account. Wells Fargo incorrectly deleted the client positions in the account the day after it transferred the positions, causing both the long and short positions to be reported to the LOPR for one day. This issue caused approximately 1,181 positions during this period to be incorrectly reported to the LOPR for one day.
The firm neither admits nor denies that violations of Exchange Rules have been committed. On top of the fine, Wells Fargo has agreed to a censure.
