The Securities and Exchange Commission (SEC) today charged Wells Fargo Clearing Services LLC and Wells Fargo Advisors Financial Network LLC for overcharging more than 10,900 investment advisory accounts more than $26.8 million in advisory fees.

Wells Fargo agreed to pay a $35 million civil penalty to settle the SEC’s charges.

According to the SEC’s order, certain financial advisers from Wells Fargo and its predecessor firms agreed to reduce the firms’ standard, pre-set advisory fees for certain clients and made handwritten or typed changes on the clients’ investment advisory agreements that reflected the reduced fees at the time their accounts were opened.

However, in certain instances, the account processing employees at Wells Fargo and its predecessor firms failed to enter the agreed-upon reduced advisory fee rates into the firms’ billing systems when setting up the clients’ accounts.

Additionally, Wells Fargo failed to adopt and implement written compliance policies and procedures reasonably designed to determine whether the billing systems it adopted contained accurate data and to prevent overbilling of the clients that the firm acquired through its predecessor firms and certain of its own new clients.

As a result, Wells Fargo and its predecessor firms overcharged certain clients who opened accounts prior to 2014 for advisory fees through the end of December 2022.

Wells Fargo paid affected accountholders approximately $40 million, including interest, to reimburse them for the overcharging.

Without admitting or denying the SEC charges, in addition to the $35 million penalty, Wells Fargo consented to the entry of the Commission’s order finding that the firm violated Sections 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-7 and agreed to a cease-and-desist order and censure.