In re WELLS FARGO CLEARING

 1 
 
 UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 102229 / January 17, 2025 
 
INVESTMENT ADVISERS ACT OF 1940 
Release No. 6827 / January 17, 2025 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-22430 
 
 
In the Matter of 
 
WELLS FARGO CLEARING 
SERVICES, LLC, and 
WELLS FARGO ADVISORS 
FINANCIAL NETWORK, 
LLC  
 
Respondents. 
 
ORDER INSTITUTING ADMINISTRATIVE 
AND CEASE-AND-DESIST PROCEEDINGS 
PURSUANT TO SECTIONS 203(e) AND 
203(k) OF THE INVESTMENT ADVISERS 
ACT OF 1940 AND SECTION 15(b) OF THE 
SECURITIES EXCHANGE ACT OF 1934, 
MAKING FINDINGS, AND IMPOSING 
REMEDIAL SANCTIONS AND A CEASE-
AND-DESIST ORDER  
   
 
I. 
 
 The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 
public interest that public administrative and cease-and-desist proceedings be, and hereby are, 
instituted pursuant to Sections 203(e) and 203(k) of the Investment Advisers Act of 1940 
(“Advisers Act”) and Section 15(b) of the Securities Exchange Act of 1934 (“Exchange Act”), 
against Wells Fargo Clearing Services, LLC and Wells Fargo Advisors Financial Network, LLC 
(collectively, the “Respondents” or “Wells Fargo Advisors”).   
 
II. 
 
 In anticipation of the institution of these proceedings, Respondents have submitted Offers 
of Settlement (the “Offers”) which the Commission has determined to accept. Solely for the 
purpose of these proceedings and any other proceedings brought by or on behalf of the 
Commission, or to which the Commission is a party, and without admitting or denying the findings  
herein, except as to the Commission’s jurisdiction over them and the subject matter of these 
proceedings, which are admitted, Respondents consent to the entry of this Order Instituting 
Administrative and Cease-and-Desist Proceedings Pursuant to Sections 203(e) and 203(k) of the 

 2 
Investment Advisers Act of 1940 and Section 15(b) of the Securities Exchange Act of 1934, 
Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order (“Order”), as 
set forth below. 
 
III. 
 
 On the basis of this Order and Respondents’ Offers, the Commission finds:  
 
Summary 
 
1. These proceedings arise out of registered investment advisers Wells Fargo Advisors’ 
failure to adopt and implement written policies and procedures reasonably designed to prevent 
violations of the Advisers Act and the rules thereunder relating to its cash sweep program, 
specifically, its use of a bank deposit sweep program (“BDSP”). From at least 2019 through May 
2024 (the “Relevant Period”), Wells Fargo Advisors offered the BDSP as the only cash sweep 
option for most advisory clients and received a significant financial benefit from advisory client 
cash in the BDSP. Wells Fargo Advisors disclosed to clients that it had a financial incentive to 
offer particular vehicles in its cash sweep program, including that Wells Fargo Advisors received 
financial benefits from advisory clients’ cash held in the BDSP. During the Relevant Period, Wells 
Fargo Advisors 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 Wells Fargo Advisors financial advisors in managing client cash in 
advisory accounts. As a result of this conduct, Wells Fargo Advisors willfully violated Section 
206(4) of the Advisers Act and Rule 206(4)-7 thereunder. Nevertheless, as described below, Wells 
Fargo Advisors later made improvements to its policies and procedures regarding the selection of 
cash sweep options for advisory clients and allocation of client cash. 
 
Respondents 
 
2. Wells Fargo Clearing Services, LLC (“Wells Fargo Clearing Services”), formerly 
known as Wells Fargo Advisors, LLC, is a Delaware limited liability company with its principal 
place of business in St. Louis, Missouri. It is a subsidiary and non-bank affiliate of Wells Fargo & 
Company and is a dual registrant that has been registered with the Commission as a broker-dealer 
since April 3, 1987, and an investment adviser since October 5, 1990. It is an affiliate of Wells 
Fargo Advisors Financial Network, LLC. In its Form ADV filed March 28, 2024, Wells Fargo 
Clearing Services reported that it had approximately $558 billion in regulatory assets under 
management.  
 
3. Wells Fargo Advisors Financial Network, LLC (“Wells Fargo Advisors Financial 
Network”) is a Delaware limited liability company with its principal place of business in St. Louis, 
Missouri. It is a subsidiary and non-bank affiliate of Wells Fargo & Company and is a dual 
registrant that has been registered with the Commission as a broker-dealer since January 28, 1983, 
and an investment adviser since April 3, 2000. It is an affiliate of Wells Fargo Clearing Services. In 
its Form ADV, filed March 28, 2024, Wells Fargo Advisors Financial Network reported that it had 

 3 
approximately $154 billion in regulatory assets under management. Wells Fargo Clearing Services 
and Wells Fargo Advisors Financial Network collectively provide advisory services under the 
brand name “Wells Fargo Advisors.” 
 
Background 
 
Wells Fargo Advisors’ FDIC- Insured Bank Deposit Sweep Program was the Only Cash Sweep 
Program Option for Most Advisory Clients During the Relevant Period 
 
4. Wells Fargo Advisors offers advisory services through many advisory programs to 
its advisory clients, including discretionary accounts managed by Wells Fargo Advisors financial 
advisors, accounts managed by the client based upon advice from Wells Fargo Advisors, portfolios 
managed by Wells Fargo Advisors portfolio managers, and portfolios managed by third-party 
investment advisers. 
 
5. For all advisory programs, Wells Fargo Advisors offers advisory clients a cash 
sweep program that allows clients to earn a return on uninvested cash balances in their accounts by 
automatically transferring the cash balances into a cash sweep product until the cash is invested or 
otherwise used to satisfy obligations. During the Relevant Period, the BDSP was the only cash 
sweep product option in most Wells Fargo Advisors advisory programs. Outside the cash sweep 
program, Wells Fargo Advisors also offers money market funds, treasuries and CDs, and other 
cash products for clients to invest their cash. Wells Fargo Advisors charges an advisory fee on 
cash held in the cash sweep program, as well as cash invested in these other options. 
 
6. In the BDSP, Wells Fargo Advisors automatically sweeps advisory clients’ 
uninvested cash holdings into interest-bearing accounts subject to Federal Deposit Insurance 
Corporation (“FDIC”) insurance at one or more banks, including its affiliate Wells Fargo Bank, 
N.A. (“Wells Fargo Bank”). Specifically, Wells Fargo Advisors offers a Standard Bank Deposit 
Sweep Program, which provided for deposits with two or more affiliated banks, and the Expanded 
Bank Deposit Sweep, which provided for deposits at affiliated banks and unaffiliated banks.   
 
7. Wells Fargo Advisors sets the interest rate offered in the BDSP. Wells Fargo 
Advisors’ BDSP typically offered lower yields than other cash alternatives, including cash sweep 
money market mutual fund options. The yield differential between Wells Fargo Advisors’ BDSP 
and other cash sweep alternatives varied; during the Relevant Period at times the differences were 
minimal and at times the differences exceeded 500 basis points.  
 
8. Wells Fargo Advisors swept billions of dollars of client cash into its BDSP on a 
yearly basis between 2019 and 2023. In addition to earning advisory fees on BDSP assets, Wells 
Fargo Advisors benefits financially from its advisory clients’ cash balances held in the BDSP in 
other ways. Wells Fargo Clearing Services received direct payments from Wells Fargo Bank as 
well as payments from external banks. In addition, the business segment in which Wells Fargo 
Advisors operates reported to shareholders income credits related to BDSP balances, offset by 
yield paid to customers.  Wells Fargo Advisors described the BDSP to clients in its Forms ADV 

 4 
Part 2A and other documents, including that Wells Fargo Advisors received financial benefits from 
advisory clients’ cash held in the BDSP.  
 
Wells Fargo Advisors Failed to Adopt and Implement Reasonably Designed Written Policies and 
Procedures Concerning Its Cash Sweep Program  
 
9. Section 206(4) of the Advisers Act and Rule 206(4)-7 thereunder require a 
registered investment adviser to adopt and implement written policies and procedures reasonably 
designed to prevent violations by the adviser and its supervised persons of the Advisers Act and the 
rules adopted thereunder. During the Relevant Period, Wells Fargo Advisors failed to adopt and 
implement written compliance policies and procedures reasonably designed to prevent violations 
by the adviser and its supervised persons of the Advisers Act and the rules adopted thereunder 
concerning its cash sweep program. 
 
10. First, Wells Fargo Advisors failed to adopt and implement reasonably designed 
written policies and procedures to consider the best interests of clients when evaluating and 
selecting which cash sweep program options to make available to clients. Wells Fargo Advisors 
evaluated and selected the cash sweep program options and determined to place cash sweep assets 
for the majority of advisory clients in the FDIC-insured BDSP as a default option or only option. 
Wells Fargo Advisors lacked reasonably designed written policies and procedures designed to 
evaluate whether the cash sweep program option(s) selected were in the best interests of clients. 
While documents exist showing that individuals and a committee at Wells Fargo Advisors 
regularly considered what options should be provided to advisory clients in the cash sweep 
program, these documents generally do not reflect discussion of which options were in the clients’ 
best interest, for example considering whether selecting a sweep option with higher yields similar 
to government money market funds would be in the best interests of clients.  
 
11. Second, Wells Fargo Advisors failed to adopt and implement reasonably designed 
written policies and procedures concerning cash allocation, including the duties of the Wells Fargo 
Advisors’ financial advisors in managing client cash in the client’s best interest and reasonably 
designed policies relating to the amount of advisory client cash in the BDSP. While Wells Fargo 
Advisors generally required its financial advisors to manage all client assets according to a client’s 
goals and objectives, it did not have a reasonably designed process to monitor whether financial 
advisors moved client cash held in the BDSP to other cash investment options if that was necessary 
to meet the client’s goals, given that most advisory clients’ uninvested cash defaulted into the 
BDSP. Moreover, during times of rising interest rates, for most of the Relevant Period, Wells Fargo 
Advisors had no policies or procedures that specifically required that its financial advisors evaluate 
whether an advisory client’s cash should remain in the BDSP option or be deployed elsewhere, 
including to, where consistent with a client’s investment profile, other cash management options. 
 
12. Wells Fargo Advisors had policies concerning limits on the amount of cash that 
could be held in the BDSP. However, the limits were set at 25% for most of the Relevant Period, 
and only applied to certain advisory programs. These policies were not reasonably designed to 
monitor or regularly evaluate whether client cash was appropriately allocated on a timely basis 
according to a client’s goals and objectives. In October 2023, Wells Fargo Advisors adopted a new 

 5 
written policy that limited BDSP balances to 5% of a client’s total assets for clients in client-
directed and financial adviser-directed programs. The limit was raised back to 25% in June 2024 
when Wells Fargo Advisors began offering a higher yield on the BDSP. 
 
13. While Wells Fargo Advisors maintained a duty to provide advice on cash and 
charged an advisory fee on the cash in advisory accounts, Wells Fargo Advisors’ disclosures were 
inconsistent and stated in certain materials that “it does not have any duty to monitor the Cash 
Sweep Vehicle for your account, or make recommendations about, or make changes to, the Cash 
Sweep Program that may be beneficial to you.” This inconsistency made it even more important to 
have policies specifically addressing the allocation of cash within the BDSP.   
 
Violations 
 
 14. As a result of the conduct described above, Wells Fargo Advisors willfully
1
 
violated Section 206(4) of the Advisers Act and Rule 206(4)-7 promulgated thereunder, which 
requires, among other things, that a registered investment adviser adopt and implement written 
policies and procedures reasonably designed to prevent violations of the Advisers Act and the rules 
promulgated thereunder. 
 
Wells Fargo Advisors’ Remedial Efforts and Cooperation 
15. In determining to accept the Offers, the Commission considered remedial acts 
promptly undertaken by Wells Fargo Advisors and cooperation afforded the Commission staff. 
For example, Wells Fargo Advisors made improvements to its policies and procedures regarding 
the selection of cash sweep options for advisory clients and the allocation of client cash in 
advisory accounts consistent with their stated goals; and reevaluated the limits on the BDSP 
holdings. During the investigation, Wells Fargo Advisors also provided detailed narrative 
responses on numerous topics, which expedited the investigation.  
IV. 
 In view of the foregoing, the Commission deems it appropriate and in the public interest to 
impose the sanctions agreed to in Respondents’ Offers. 
 
                                                 
1
  “Willfully,” for purposes of imposing relief under Section 203(e) of the Advisers Act and 
Section 15(b) of the Exchange Act, “‘means no more than that the person charged with the 
duty knows what he is doing.’” Wonsover v. SEC, 205 F.3d 408, 414 (D.C. Cir. 2000) 
(quoting Hughes v. SEC, 174 F.2d 969, 977 (D.C. Cir. 1949)). There is no requirement that 
the actor “also be aware that he is violating one of the Rules or Acts.”  Tager v. SEC, 344 
F.2d 5, 8 (2d Cir. 1965). The decision in The Robare Group, Ltd. v. SEC, which construed 
the term “willfully” for purposes of a differently structured statutory provision, does not 
alter that standard.  922 F.3d 468, 478-79 (D.C. Cir. 2019) (setting forth the showing 
required to establish that a person has “willfully omit[ted]” material information from a 
required disclosure in violation of Section 207 of the Advisers Act). 
    

 6 
 Accordingly, pursuant to Sections 203(e) and 203(k) of the Advisers Act and Section 15(b) 
of the Exchange Act, it is hereby ORDERED that: 
 
 A. Wells Fargo Clearing Services and Wells Fargo Advisors Financial Network cease 
and desist from committing or causing any violations and any future violations of Section 206(4) of 
the Advisers Act and Rule 206(4)-7 thereunder.  
 
B. Wells Fargo Clearing Services and Wells Fargo Advisors Financial Network are 
censured.  
 
C. Wells Fargo Clearing Services shall, within 10 days of entry of this Order, pay a 
civil money penalty of $28 million to the Securities and Exchange Commission for transfer to the 
general fund of the United States Treasury, subject to Section 21F(g)(3) of the Securities Exchange 
Act of 1934. If timely payment is not made, additional interest shall accrue pursuant to 31 U.S.C. § 
3717. Payment must be made in one of the following ways:   
 
(1) Respondent may transmit payment electronically to the Commission, which 
will provide detailed ACH transfer/Fedwire instructions upon request;  
 
(2) Respondent may make direct payment from a bank account via Pay.gov 
through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
 
(3) Respondent may pay by certified check, bank cashier’s check, or United 
States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to:  
 
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 
 
Payments by check or money order must be accompanied by a cover letter identifying 
Wells Fargo Clearing Services as a Respondent in these proceedings, and the file number of these 
proceedings; a copy of the cover letter and check or money order must be sent to Kimberly 
Frederick, Assistant Director, Asset Management Unit, Securities and Exchange Commission, 
Byron G. Rogers Federal Building, 1961 Stout Street, Suite 1700, Denver, CO 80294-1961.   
 
D. Wells Fargo Advisors Financial Network shall, within 10 days of entry of this 
Order, pay a civil money penalty of $7 million to the Securities and Exchange Commission for 
transfer to the general fund of the United States Treasury, subject to Section 21F(g)(3) of the 
Securities Exchange Act of 1934. If timely payment is not made, additional interest shall accrue 
pursuant to 31 U.S.C. § 3717. Payment must be made in one of the following ways:   
 

 7 
(1) Respondent may transmit payment electronically to the Commission, which 
will provide detailed ACH transfer/Fedwire instructions upon request;  
 
(2) Respondent may make direct payment from a bank account via Pay.gov 
through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
 
(3) Respondent may pay by certified check, bank cashier’s check, or United 
States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to:  
 
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 
 
Payments by check or money order must be accompanied by a cover letter identifying 
Wells Fargo Advisors Financial Network as a Respondent in these proceedings, and the file 
number of these proceedings; a copy of the cover letter and check or money order must be sent to 
Kimberly Frederick, Assistant Director, Asset Management Unit, Securities and Exchange 
Commission, Byron G. Rogers Federal Building, 1961 Stout Street, Suite 1700, Denver, CO 
80294-1961.   
 
E. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 
treated as penalties paid to the government for all purposes, including all tax purposes. To preserve 
the deterrent effect of the civil penalty, Respondents agree that in any Related Investor Action, they 
shall not argue that they are entitled to, nor shall they benefit by, offset or reduction of any award of 
compensatory damages by the amount of any part of Respondents’ payment of a civil penalty in this 
action (“Penalty Offset”). If the court in any Related Investor Action grants such a Penalty Offset, 
Respondents agree that they shall, within 30 days after entry of a final order granting the Penalty 
Offset, notify the Commission’s counsel in this action and pay the amount of the Penalty Offset to 
the Securities and Exchange Commission. Such a payment shall not be deemed an additional civil 
penalty and shall not be deemed to change the amount of the civil penalty imposed in this 
proceeding. For purposes of this paragraph, a “Related Investor Action” means a private damages 
action brought against Respondents by or on behalf of one or more investors based on substantially 
the same facts as alleged in the Order instituted by the Commission in this proceeding. 
 
 By the Commission. 
 
 
 
Vanessa A. Countryman 
       Secretary 
 
 

1 

 

 UNITED STATES OF AMERICA 

 Before the 

 SECURITIES AND EXCHANGE COMMISSION 

 

SECURITIES EXCHANGE ACT OF 1934 

Release No. 102229 / January 17, 2025 

 

INVESTMENT ADVISERS ACT OF 1940 

Release No. 6827 / January 17, 2025 

 

ADMINISTRATIVE PROCEEDING 

File No. 3-22430 

 

 

In the Matter of 

 

WELLS FARGO CLEARING 

SERVICES, LLC, and 

WELLS FARGO ADVISORS 

FINANCIAL NETWORK, 

LLC  

 

Respondents. 

 

ORDER INSTITUTING ADMINISTRATIVE 

AND CEASE-AND-DESIST PROCEEDINGS 

PURSUANT TO SECTIONS 203(e) AND 

203(k) OF THE INVESTMENT ADVISERS 

ACT OF 1940 AND SECTION 15(b) OF THE 

SECURITIES EXCHANGE ACT OF 1934, 

MAKING FINDINGS, AND IMPOSING 

REMEDIAL SANCTIONS AND A CEASE-

AND-DESIST ORDER  

   

 

I. 

 

 The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 

public interest that public administrative and cease-and-desist proceedings be, and hereby are, 

instituted pursuant to Sections 203(e) and 203(k) of the Investment Advisers Act of 1940 

(“Advisers Act”) and Section 15(b) of the Securities Exchange Act of 1934 (“Exchange Act”), 

against Wells Fargo Clearing Services, LLC and Wells Fargo Advisors Financial Network, LLC 

(collectively, the “Respondents” or “Wells Fargo Advisors”).   

 

II. 

 

 In anticipation of the institution of these proceedings, Respondents have submitted Offers 

of Settlement (the “Offers”) which the Commission has determined to accept. Solely for the 

purpose of these proceedings and any other proceedings brought by or on behalf of the 

Commission, or to which the Commission is a party, and without admitting or denying the findings  

herein, except as to the Commission’s jurisdiction over them and the subject matter of these 

proceedings, which are admitted, Respondents consent to the entry of this Order Instituting 

Administrative and Cease-and-Desist Proceedings Pursuant to Sections 203(e) and 203(k) of the 



 2 

Investment Advisers Act of 1940 and Section 15(b) of the Securities Exchange Act of 1934, 

Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order (“Order”), as 

set forth below. 

 

III. 

 

 On the basis of this Order and Respondents’ Offers, the Commission finds:  

 

Summary 

 

1. These proceedings arise out of registered investment advisers Wells Fargo Advisors’ 

failure to adopt and implement written policies and procedures reasonably designed to prevent 

violations of the Advisers Act and the rules thereunder relating to its cash sweep program, 

specifically, its use of a bank deposit sweep program (“BDSP”). From at least 2019 through May 

2024 (the “Relevant Period”), Wells Fargo Advisors offered the BDSP as the only cash sweep 

option for most advisory clients and received a significant financial benefit from advisory client 

cash in the BDSP. Wells Fargo Advisors disclosed to clients that it had a financial incentive to 

offer particular vehicles in its cash sweep program, including that Wells Fargo Advisors received 

financial benefits from advisory clients’ cash held in the BDSP. During the Relevant Period, Wells 

Fargo Advisors 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 Wells Fargo Advisors financial advisors in managing client cash in 

advisory accounts. As a result of this conduct, Wells Fargo Advisors willfully violated Section 

206(4) of the Advisers Act and Rule 206(4)-7 thereunder. Nevertheless, as described below, Wells 

Fargo Advisors later made improvements to its policies and procedures regarding the selection of 

cash sweep options for advisory clients and allocation of client cash. 

 

Respondents 

 

2. Wells Fargo Clearing Services, LLC (“Wells Fargo Clearing Services”), formerly 

known as Wells Fargo Advisors, LLC, is a Delaware limited liability company with its principal 

place of business in St. Louis, Missouri. It is a subsidiary and non-bank affiliate of Wells Fargo & 

Company and is a dual registrant that has been registered with the Commission as a broker-dealer 

since April 3, 1987, and an investment adviser since October 5, 1990. It is an affiliate of Wells 

Fargo Advisors Financial Network, LLC. In its Form ADV filed March 28, 2024, Wells Fargo 

Clearing Services reported that it had approximately $558 billion in regulatory assets under 

management.  

 

3. Wells Fargo Advisors Financial Network, LLC (“Wells Fargo Advisors Financial 

Network”) is a Delaware limited liability company with its principal place of business in St. Louis, 

Missouri. It is a subsidiary and non-bank affiliate of Wells Fargo & Company and is a dual 

registrant that has been registered with the Commission as a broker-dealer since January 28, 1983, 

and an investment adviser since April 3, 2000. It is an affiliate of Wells Fargo Clearing Services. In 

its Form ADV, filed March 28, 2024, Wells Fargo Advisors Financial Network reported that it had 



 3 

approximately $154 billion in regulatory assets under management. Wells Fargo Clearing Services 

and Wells Fargo Advisors Financial Network collectively provide advisory services under the 

brand name “Wells Fargo Advisors.” 

 

Background 

 

Wells Fargo Advisors’ FDIC- Insured Bank Deposit Sweep Program was the Only Cash Sweep 

Program Option for Most Advisory Clients During the Relevant Period 

 

4. Wells Fargo Advisors offers advisory services through many advisory programs to 

its advisory clients, including discretionary accounts managed by Wells Fargo Advisors financial 

advisors, accounts managed by the client based upon advice from Wells Fargo Advisors, portfolios 

managed by Wells Fargo Advisors portfolio managers, and portfolios managed by third-party 

investment advisers. 

 

5. For all advisory programs, Wells Fargo Advisors offers advisory clients a cash 

sweep program that allows clients to earn a return on uninvested cash balances in their accounts by 

automatically transferring the cash balances into a cash sweep product until the cash is invested or 

otherwise used to satisfy obligations. During the Relevant Period, the BDSP was the only cash 

sweep product option in most Wells Fargo Advisors advisory programs. Outside the cash sweep 

program, Wells Fargo Advisors also offers money market funds, treasuries and CDs, and other 

cash products for clients to invest their cash. Wells Fargo Advisors charges an advisory fee on 

cash held in the cash sweep program, as well as cash invested in these other options. 

 

6. In the BDSP, Wells Fargo Advisors automatically sweeps advisory clients’ 

uninvested cash holdings into interest-bearing accounts subject to Federal Deposit Insurance 

Corporation (“FDIC”) insurance at one or more banks, including its affiliate Wells Fargo Bank, 

N.A. (“Wells Fargo Bank”). Specifically, Wells Fargo Advisors offers a Standard Bank Deposit 

Sweep Program, which provided for deposits with two or more affiliated banks, and the Expanded 

Bank Deposit Sweep, which provided for deposits at affiliated banks and unaffiliated banks.   

 

7. Wells Fargo Advisors sets the interest rate offered in the BDSP. Wells Fargo 

Advisors’ BDSP typically offered lower yields than other cash alternatives, including cash sweep 

money market mutual fund options. The yield differential between Wells Fargo Advisors’ BDSP 

and other cash sweep alternatives varied; during the Relevant Period at times the differences were 

minimal and at times the differences exceeded 500 basis points.  

 

8. Wells Fargo Advisors swept billions of dollars of client cash into its BDSP on a 

yearly basis between 2019 and 2023. In addition to earning advisory fees on BDSP assets, Wells 

Fargo Advisors benefits financially from its advisory clients’ cash balances held in the BDSP in 

other ways. Wells Fargo Clearing Services received direct payments from Wells Fargo Bank as 

well as payments from external banks. In addition, the business segment in which Wells Fargo 

Advisors operates reported to shareholders income credits related to BDSP balances, offset by 

yield paid to customers.  Wells Fargo Advisors described the BDSP to clients in its Forms ADV 



 4 

Part 2A and other documents, including that Wells Fargo Advisors received financial benefits from 

advisory clients’ cash held in the BDSP.  

 

Wells Fargo Advisors Failed to Adopt and Implement Reasonably Designed Written Policies and 

Procedures Concerning Its Cash Sweep Program  

 

9. Section 206(4) of the Advisers Act and Rule 206(4)-7 thereunder require a 

registered investment adviser to adopt and implement written policies and procedures reasonably 

designed to prevent violations by the adviser and its supervised persons of the Advisers Act and the 

rules adopted thereunder. During the Relevant Period, Wells Fargo Advisors failed to adopt and 

implement written compliance policies and procedures reasonably designed to prevent violations 

by the adviser and its supervised persons of the Advisers Act and the rules adopted thereunder 

concerning its cash sweep program. 

 

10. First, Wells Fargo Advisors failed to adopt and implement reasonably designed 

written policies and procedures to consider the best interests of clients when evaluating and 

selecting which cash sweep program options to make available to clients. Wells Fargo Advisors 

evaluated and selected the cash sweep program options and determined to place cash sweep assets 

for the majority of advisory clients in the FDIC-insured BDSP as a default option or only option. 

Wells Fargo Advisors lacked reasonably designed written policies and procedures designed to 

evaluate whether the cash sweep program option(s) selected were in the best interests of clients. 

While documents exist showing that individuals and a committee at Wells Fargo Advisors 

regularly considered what options should be provided to advisory clients in the cash sweep 

program, these documents generally do not reflect discussion of which options were in the clients’ 

best interest, for example considering whether selecting a sweep option with higher yields similar 

to government money market funds would be in the best interests of clients.  

 

11. Second, Wells Fargo Advisors failed to adopt and implement reasonably designed 

written policies and procedures concerning cash allocation, including the duties of the Wells Fargo 

Advisors’ financial advisors in managing client cash in the client’s best interest and reasonably 

designed policies relating to the amount of advisory client cash in the BDSP. While Wells Fargo 

Advisors generally required its financial advisors to manage all client assets according to a client’s 

goals and objectives, it did not have a reasonably designed process to monitor whether financial 

advisors moved client cash held in the BDSP to other cash investment options if that was necessary 

to meet the client’s goals, given that most advisory clients’ uninvested cash defaulted into the 

BDSP. Moreover, during times of rising interest rates, for most of the Relevant Period, Wells Fargo 

Advisors had no policies or procedures that specifically required that its financial advisors evaluate 

whether an advisory client’s cash should remain in the BDSP option or be deployed elsewhere, 

including to, where consistent with a client’s investment profile, other cash management options. 

 

12. Wells Fargo Advisors had policies concerning limits on the amount of cash that 

could be held in the BDSP. However, the limits were set at 25% for most of the Relevant Period, 

and only applied to certain advisory programs. These policies were not reasonably designed to 

monitor or regularly evaluate whether client cash was appropriately allocated on a timely basis 

according to a client’s goals and objectives. In October 2023, Wells Fargo Advisors adopted a new 



 5 

written policy that limited BDSP balances to 5% of a client’s total assets for clients in client-

directed and financial adviser-directed programs. The limit was raised back to 25% in June 2024 

when Wells Fargo Advisors began offering a higher yield on the BDSP. 

 

13. While Wells Fargo Advisors maintained a duty to provide advice on cash and 

charged an advisory fee on the cash in advisory accounts, Wells Fargo Advisors’ disclosures were 

inconsistent and stated in certain materials that “it does not have any duty to monitor the Cash 

Sweep Vehicle for your account, or make recommendations about, or make changes to, the Cash 

Sweep Program that may be beneficial to you.” This inconsistency made it even more important to 

have policies specifically addressing the allocation of cash within the BDSP.   

 

Violations 

 

 14. As a result of the conduct described above, Wells Fargo Advisors willfully1 

violated Section 206(4) of the Advisers Act and Rule 206(4)-7 promulgated thereunder, which 

requires, among other things, that a registered investment adviser adopt and implement written 

policies and procedures reasonably designed to prevent violations of the Advisers Act and the rules 

promulgated thereunder. 

 

Wells Fargo Advisors’ Remedial Efforts and Cooperation 

15. In determining to accept the Offers, the Commission considered remedial acts 

promptly undertaken by Wells Fargo Advisors and cooperation afforded the Commission staff. 

For example, Wells Fargo Advisors made improvements to its policies and procedures regarding 

the selection of cash sweep options for advisory clients and the allocation of client cash in 

advisory accounts consistent with their stated goals; and reevaluated the limits on the BDSP 

holdings. During the investigation, Wells Fargo Advisors also provided detailed narrative 

responses on numerous topics, which expedited the investigation.  

IV. 

 In view of the foregoing, the Commission deems it appropriate and in the public interest to 

impose the sanctions agreed to in Respondents’ Offers. 

 

                                                 
1  “Willfully,” for purposes of imposing relief under Section 203(e) of the Advisers Act and 

Section 15(b) of the Exchange Act, “‘means no more than that the person charged with the 

duty knows what he is doing.’” Wonsover v. SEC, 205 F.3d 408, 414 (D.C. Cir. 2000) 

(quoting Hughes v. SEC, 174 F.2d 969, 977 (D.C. Cir. 1949)). There is no requirement that 

the actor “also be aware that he is violating one of the Rules or Acts.”  Tager v. SEC, 344 

F.2d 5, 8 (2d Cir. 1965). The decision in The Robare Group, Ltd. v. SEC, which construed 

the term “willfully” for purposes of a differently structured statutory provision, does not 

alter that standard.  922 F.3d 468, 478-79 (D.C. Cir. 2019) (setting forth the showing 

required to establish that a person has “willfully omit[ted]” material information from a 

required disclosure in violation of Section 207 of the Advisers Act). 

    



 6 

 Accordingly, pursuant to Sections 203(e) and 203(k) of the Advisers Act and Section 15(b) 

of the Exchange Act, it is hereby ORDERED that: 

 

 A. Wells Fargo Clearing Services and Wells Fargo Advisors Financial Network cease 

and desist from committing or causing any violations and any future violations of Section 206(4) of 

the Advisers Act and Rule 206(4)-7 thereunder.  

 

B. Wells Fargo Clearing Services and Wells Fargo Advisors Financial Network are 

censured.  

 

C. Wells Fargo Clearing Services shall, within 10 days of entry of this Order, pay a 

civil money penalty of $28 million to the Securities and Exchange Commission for transfer to the 

general fund of the United States Treasury, subject to Section 21F(g)(3) of the Securities Exchange 

Act of 1934. If timely payment is not made, additional interest shall accrue pursuant to 31 U.S.C. § 

3717. Payment must be made in one of the following ways:   

 

(1) Respondent may transmit payment electronically to the Commission, which 

will provide detailed ACH transfer/Fedwire instructions upon request;  

 

(2) Respondent may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  

 

(3) Respondent may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 

Commission and hand-delivered or mailed to:  

 

Enterprise Services Center 

Accounts Receivable Branch 

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard 

Oklahoma City, OK 73169 

 

Payments by check or money order must be accompanied by a cover letter identifying 

Wells Fargo Clearing Services as a Respondent in these proceedings, and the file number of these 

proceedings; a copy of the cover letter and check or money order must be sent to Kimberly 

Frederick, Assistant Director, Asset Management Unit, Securities and Exchange Commission, 

Byron G. Rogers Federal Building, 1961 Stout Street, Suite 1700, Denver, CO 80294-1961.   

 

D. Wells Fargo Advisors Financial Network shall, within 10 days of entry of this 

Order, pay a civil money penalty of $7 million to the Securities and Exchange Commission for 

transfer to the general fund of the United States Treasury, subject to Section 21F(g)(3) of the 

Securities Exchange Act of 1934. If timely payment is not made, additional interest shall accrue 

pursuant to 31 U.S.C. § 3717. Payment must be made in one of the following ways:   

 

http://www.sec.gov/about/offices/ofm.htm


 7 

(1) Respondent may transmit payment electronically to the Commission, which 

will provide detailed ACH transfer/Fedwire instructions upon request;  

 

(2) Respondent may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  

 

(3) Respondent may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 

Commission and hand-delivered or mailed to:  

 

Enterprise Services Center 

Accounts Receivable Branch 

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard 

Oklahoma City, OK 73169 

 

Payments by check or money order must be accompanied by a cover letter identifying 

Wells Fargo Advisors Financial Network as a Respondent in these proceedings, and the file 

number of these proceedings; a copy of the cover letter and check or money order must be sent to 

Kimberly Frederick, Assistant Director, Asset Management Unit, Securities and Exchange 

Commission, Byron G. Rogers Federal Building, 1961 Stout Street, Suite 1700, Denver, CO 

80294-1961.   

 

E. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 

treated as penalties paid to the government for all purposes, including all tax purposes. To preserve 

the deterrent effect of the civil penalty, Respondents agree that in any Related Investor Action, they 

shall not argue that they are entitled to, nor shall they benefit by, offset or reduction of any award of 

compensatory damages by the amount of any part of Respondents’ payment of a civil penalty in this 

action (“Penalty Offset”). If the court in any Related Investor Action grants such a Penalty Offset, 

Respondents agree that they shall, within 30 days after entry of a final order granting the Penalty 

Offset, notify the Commission’s counsel in this action and pay the amount of the Penalty Offset to 

the Securities and Exchange Commission. Such a payment shall not be deemed an additional civil 

penalty and shall not be deemed to change the amount of the civil penalty imposed in this 

proceeding. For purposes of this paragraph, a “Related Investor Action” means a private damages 

action brought against Respondents by or on behalf of one or more investors based on substantially 

the same facts as alleged in the Order instituted by the Commission in this proceeding. 

 

 By the Commission. 

 

 

 

Vanessa A. Countryman 

       Secretary 

 

 

http://www.sec.gov/about/offices/ofm.htm

	UNITED STATES OF AMERICA
	Background