The Financial Industry Regulatory Authority has sanctioned Waddell & Reed, Inc., a broker-dealer and investment adviser, for failing to deliver purchase confirmations to advisory clients because of a software-coding change by a third-party service provider.
The case is a reminder that a firm is responsible for ensuring that its operations comply with federal and FINRA rules, whether the firm conducts the operations itself or outsources them to an outside vendor.
Without admitting or denying FINRA's findings that the firm violated Rule 10b-10 under the Securities Exchange Act of 1934, NASD Rules 2230 and 2110 and FINRA Rule 2010, Waddell & Reed consented to being censured and fined $75,000.
FINRA found that the failure stemmed from a change implemented by its service provider in November 2010. One effect of the change, which had not been requested by Waddell or its transfer agent subsidiary, was to prevent customers from receiving confirmations when cash in a mutual fund asset
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