Filing Details

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 13D

Under the Securities Exchange Act of 1934

(Amendment No. 2)

 

 

PIMCO NEW YORK MUNICIPAL INCOME FUND II

(Name of Issuer)

VARIABLE RATE MUNIFUND TERM PREFERRED SHARES

(Title of Class of Securities)

72200Y409

(CUSIP Number)

Willie J. White

Senior Counsel

Wells Fargo & Company

301 South College Street, 22nd Floor

Charlotte, NC 28202-6000

(704) 410-5082

With a copy to:

Patrick Quill

Chapman and Cutler LLP

1270 Avenue of the Americas 30th Floor

New York, NY 10020

(212) 655-2506

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

December 6, 2018

(Date of Event Which Requires Filing of this Statement)

 

 

If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box  ☐.

 

*	The remainder of this cover page shall be filled out for a reporting persons initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required in the remainder of this cover page shall not be deemed to be filed for the purpose of Section 18 of the Securities Exchange Act of 1934 (Act) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

 

 

 

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SCHEDULE 13D

CUSIP No. 72200Y409

 

1.		Names of Reporting Persons     Wells Fargo & Company                 41-0449260
2.		Check the Appropriate Box if a member of a Group (see instructions)   a.  ☐        b.  ☒
3.		SEC Use Only
4.		Source of Funds (See Instructions):     WC
5.		Check Box if Disclosure of Legal Proceedings Is Required pursuant to Items 2(d) or 2(e).     ☒
6.		Citizenship or Place of Organization     Delaware

Number of Shares   Beneficially   Owned by Each Reporting Person With:				7.		Sole Voting Power:     0
				8.		Shared Voting Power:     210
				9.		Sole Dispositive Power:     0
				10.		Shared Dispositive Power:     210

11.		Aggregate Amount Beneficially Owned by Each Reporting Person:     210
12.		Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)
13.		Percent of Class Represented by Amount in Row (11):     8.30%
14.		Type of Reporting Person (See Instructions)     HC

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SCHEDULE 13D

CUSIP No. 72200Y409

 

1.		Names of Reporting Persons     Wells Fargo Municipal Capital Strategies, LLC                 45-2541449
2.		Check the Appropriate Box if a member of a Group (see instructions)   a.  ☐        b.  ☒
3.		SEC Use Only
4.		Source of Funds (See Instructions):     WC
5.		Check Box if Disclosure of Legal Proceedings Is Required pursuant to Items 2(d) or 2(e).     ☒
6.		Citizenship or Place of Organization     Delaware

Number of Shares   Beneficially   Owned by Each Reporting Person With:				7.		Sole Voting Power:     0
				8.		Shared Voting Power:     210
				9.		Sole Dispositive Power:     0
				10.		Shared Dispositive Power:     210

11.		Aggregate Amount Beneficially Owned by Each Reporting Person:     210
12.		Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)
13.		Percent of Class Represented by Amount in Row (11):     8.30%
14.		Type of Reporting Person (See Instructions)     00

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SCHEDULE 13D

CUSIP No. 72200Y409

 

1.		Names of Reporting Persons     WFC Holdings, LLC                41-1921346
2.		Check the Appropriate Box if a member of a Group (see instructions)   a.  ☐        b.  ☒
3.		SEC Use Only
4.		Source of Funds (See Instructions):     WC
5.		Check Box if Disclosure of Legal Proceedings Is Required pursuant to Items 2(d) or 2(e).     ☒
6.		Citizenship or Place of Organization     Delaware

Number of Shares   Beneficially   Owned by Each Reporting Person With:				7.		Sole Voting Power:     0
				8.		Shared Voting Power:     0
				9.		Sole Dispositive Power:     0
				10.		Shared Dispositive Power:     0

11.		Aggregate Amount Beneficially Owned by Each Reporting Person:     0
12.		Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)
13.		Percent of Class Represented by Amount in Row (11):   0%
14.		Type of Reporting Person (See Instructions)     00

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SCHEDULE 13D

CUSIP No. 72200Y409

 

1.		Names of Reporting Persons     EVEREN Capital Corporation                36-4019175
2.		Check the Appropriate Box if a member of a Group (see instructions)   a.  ☐        b.  ☒
3.		SEC Use Only
4.		Source of Funds (See Instructions):     WC
5.		Check Box if Disclosure of Legal Proceedings Is Required pursuant to Items 2(d) or 2(e).     ☒
6.		Citizenship or Place of Organization     Delaware

Number of Shares   Beneficially   Owned by Each Reporting Person With:				7.		Sole Voting Power:     0
				8.		Shared Voting Power:     0
				9.		Sole Dispositive Power:     0
				10.		Shared Dispositive Power:     0

11.		Aggregate Amount Beneficially Owned by Each Reporting Person:     0
12.		Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)
13.		Percent of Class Represented by Amount in Row (11):   0 %
14.		Type of Reporting Person (See Instructions)     00

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This Amendment No. 2 (this Amendment) amends, as set forth below, the statement on Schedule 13D, related to events occurring as of December 31, 2008 and filed with the SEC on September 12, 2018 (the Original Schedule 13D) and as further amended by Amendment No. 1 dated September 18, 2018 and filed with the SEC on September 20, 2018 (Amendment No. 1) for Wells Fargo & Company (Wells Fargo), WFC Holdings, LLC (WFC Holdings) and EVEREN Capital Corporation (EVEREN, and collectively with Wells Fargo, WFC Holdings, and Wells Fargo Municipal Capital Strategies, LLC (Capital Strategies), the Reporting Persons) with respect to the Variable Rate MuniFund Term Preferred Shares (the VMTP Shares), of PIMCO New York Municipal Income Fund II (the Issuer or the Company).

This Amendment is being filed as a result of the transfer by WFC Holdings of 95 VMTP Shares (CUSIP No. 72200Y409), representing all the VMTP Shares owned by WFC Holdings, and the transfer by EVEREN of 1 VMTP Share (CUSIP No. 72200Y409), representing all the VMTP Shares owned by EVEREN, to Capital Strategies (the Transfer). Prior to the Transfer, Capital Strategies held 114 VMTP Shares and following the transfer Capital Strategies holds 210 VMTP Shares.

Item 2

(i) Item 2 of the Original Schedule 13D is hereby amended by deleting the paragraphs related to the names and addresses of the Reporting Persons and replacing such paragraphs with the following:

This Statement is being filed on behalf of each of the following persons (collectively, the Reporting Persons):

 

i.

Wells Fargo & Company (Wells Fargo); and

 

ii.

Wells Fargo Municipal Capital Strategies, LLC (Capital Strategies).

This Statement relates to the VMTP Shares that were purchased for the account of Capital Strategies from WFC Holdings and EVEREN.

The address of the principal business office of Wells Fargo is:

420 Montgomery Street

San Francisco, CA 94104

The address of the principal business office of Capital Strategies is:

375 Park Avenue

New York, NY 10152

(ii) Item 2 of the Original Schedule 13D is hereby further amended by deleting Schedule I and Schedule II referenced therein and replacing them with Schedule I and Schedule II included with this Amendment.

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The sixth paragraph is replaced with the following:

Wells Fargo and its subsidiaries provide banking, investments, and mortgage products and services, as well as consumer and commercial finance through more than 7,950 locations, 13,000 ATMs, digital (online, mobile and social), and contact centers (phone, email and correspondence), and we have offices in 37 countries and territories to support customers who conduct business in the global economy.

Item 3

Item 3 of the Original Schedule 13D is hereby deleted in its entirety and replaced with the following:

Capital Strategies purchased from WFC Holdings 95 VMTP Shares (CUSIP No. 72200Y409) and from EVEREN 1 VMTP Share (CUSIP No. 72200Y409) (the Transfer).

The aggregate amount of funds used by Capital Strategies for the purchase was approximately $9,600,000. The source of funds was the working capital of Capital Strategies.

Item 4 Purpose of the Transaction

Item 4 of the Original Schedule 13D is hereby amended by adding the following paragraph at the end thereof:

Capital Strategies made the purchase of 95 VMTP Shares (CUSIP No. 72200Y409) from WFC Holdings and 1 VMTP Share (CUSIP No. 72200Y409) from EVEREN for investment purposes. Capital Strategies acquired the 95 VMTP Shares (CUSIP No. 72200Y409) from WFC Holdings and the 1 VMTP Share (CUSIP No. 72200Y409) from EVEREN pursuant to a Purchase and Assignment Agreement, dated as of December 6, 2018, between Capital Strategies, WFC Holdings and EVEREN (the Purchase Agreement) for a purchase price of $9,600,000.

The Reporting Persons have not acquired the subject securities with any purpose, or with the effect of, changing or influencing control of the Issuer, or in connection with or as a participant in any transaction having that purpose or effect.

Item 6

Item 6 of the Original Schedule 13D is hereby amended by adding the following paragraph at the end thereof:

The voting and consent rights on the 96 VMTP Shares purchased by Capital Strategies from WFC Holdings and EVEREN will continue to be treated in the same manner as previously described in this Item 6 except that the rights previously described as held by WFC Holdings and EVEREN are now held entirely by Capital Strategies.

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Item 7 Material to be Filed as Exhibits

Item 7 of the Original Schedule 13D is hereby amended by deleting Exhibit 99.1 and Exhibit 99.2 and thereto and inserting the following additional exhibits:

 

Exhibit		Description of Exhibit
99.1		Joint Filing Agreement
99.2		Power of Attorney
99.7		Purchase and Assignment Agreement between Wells Fargo Municipal Capital Strategies, LLC, WFC Holdings, LLC and EVEREN Capital Corporation, dated as of December 6, 2018

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SIGNATURES

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Date: December 10, 2018

 

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LIST OF EXHIBITS

 

Exhibit		Description of Exhibit
99.1		Joint Filing Agreement
99.2		Power of Attorney
99.7		Purchase and Assignment Agreement between Wells Fargo Municipal Capital Strategies, LLC, WFC Holdings, LLC and EVEREN Capital Corporation, dated as of December 6, 2018

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SCHEDULE I

EXECUTIVE OFFICERS AND DIRECTORS OF REPORTING PERSONS

The following sets forth the name and present principal occupation of each executive officer and director of Wells Fargo & Company. The business address of each of the executive officers and directors of Wells Fargo & Company is 420 Montgomery Street, San Francisco, CA 94104.

 

Name		Position with Wells Fargo & Company		Principal Occupation
Timothy J. Sloan		Chief Executive Officer and President; Director		Chief Executive Officer of Wells Fargo & Company
David Galloreese		Executive Vice President		Head of Human Resources of Wells Fargo & Company
Richard D. Levy		Executive Vice President and Controller		Controller of Wells Fargo & Company
Amanda G. Norton		Senior Executive Vice President and Chief Risk Officer		Chief Risk Officer of Wells Fargo
Mary T. Mack		Senior Executive Vice President (Consumer Banking)		Head of Consumer Banking
Avid Modjtabai		Senior Executive Vice President (Payments, Virtual Solutions and Innovation)		Head of Payments, Virtual Solutions and Innovation of Wells Fargo & Company
C. Allen Parker		Senior Executive Vice President and General Counsel		General Counsel of Wells Fargo & Company
Perry G. Pelos		Senior Executive Vice President (Wholesale Banking)		Head of Wholesale Banking
John R. Shrewsberry		Senior Executive Vice President and Chief Financial Officer		Chief Financial Officer of Wells Fargo & Company
Jonathan G. Weiss		Senior Executive Vice President (Wealth and Investment Management)		Head of Wealth and Investment Management of Wells Fargo
John D. Baker II		Director		Executive Chairman and Director of FRP Holdings, Inc.

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Celeste A. Clark		Director		Principal, Abraham Clark Consulting, LLC, and Retired Senior Vice President, Global Public Policy and External Relations and Chief Sustainability Officer, Kellogg Company
Theodore F. Craver, Jr.		Director		Retired Chairman, President and CEO, Edison International
Elizabeth A. Duke		Chairman, Director		Former member of the Federal Reserve Board of Governors
Donald M. James		Director		Retired Chairman and CEO of Vulcan Materials Company
Maria R. Morris		Director		Retired Executive Vice President and Head of Global Employee Benefits, MetLife, Inc.
Karen B. Peetz		Director		Retired President, Bank of New York Mellon Corp.
Juan A. Pujadas		Director		Retired Principal, PricewaterhouseCoopers, LLP, and former Vice Chairman, Global Advisory Services, PwC International
James H. Quigley		Director		CEO Emeritus and Retired Partner of Deloitte
Ronald L. Sargent		Director		Retired Chairman, CEO of Staples, Inc.
Suzanne M. Vautrinot		Director		President of Kilovolt Consulting Inc.

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The following sets forth the name and present principal occupation of each executive officer and director of Wells Fargo Municipal Capital Strategies, LLC. The business address of each of the executive officers and directors of Wells Fargo Municipal Capital Strategies, LLC is 375 Park Avenue, New York, New York 10152.

 

Name		Position with Wells Fargo Municipal Capital Strategies, LLC		Business Address		Principal Occupation
Matthew Antunes		Vice President		375 Park Avenue New York, NY 10152		Director at Wells Fargo Bank, NA
Kristina Eng		Vice President		375 Park Avenue New York, NY 10152		Managing Director at Wells Fargo Bank, NA
Daniel George		Senior Vice President		375 Park Avenue New York, NY 10152		Managing Director at Wells Fargo Bank, NA
Bernardo Ramos		Senior Vice President; Manager		375 Park Avenue New York, NY 10152		Regional Vice President of Government and Institutional Banking at Wells Fargo Bank, NA
Adam Joseph		President		375 Park Avenue New York, NY 10152		Managing Director at Wells Fargo Bank, NA (Head of Public Finance Capital Strategies)
Phillip Smith		Executive Vice President; Manager		301 S College St, Charlotte, NC 28202		Head of Municipal Products and Government and Institutional Banking
Jay Veenker		Treasurer		600 S. 4th Street, 11th Floor, Minneapolis, MN 55415		Finance Manager at Wells Fargo Bank, NA
Lauren Locke		Manager		550 S Tryon St, Charlotte, NC 28202		Chief Administrative Officer at Wells Fargo Bank, NA
Bruce Mattaway		Manager		375 Park Avenue New York, NY 10152		Senior Vice President and Government Loan Supervisor at Wells Fargo Bank, NA
Karl Pfeil		Manager		375 Park Avenue New York, NY 10152		Senior Vice President at Wells Fargo Bank, NA (Government and Institutional Banking)

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Richard Reid		Manager		550 S Tryon St, Charlotte, NC 28202		Director at Wells Fargo Bank, NA
Patrice DeCorrevont		Manager		10 S Wacker Dr, Chicago, IL 60606		Managing Director at Wells Fargo Bank, NA
Deanna Ernst		Secretary		301 S College St, Charlotte, NC 28202		Paralegal at Wells Fargo Bank, NA

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The following sets forth the name and present principal occupation of each executive officer and director of WFC Holdings, LLC. The business address of each of the executive officers and directors of WFC Holdings, LLC is 420 Montgomery Street, San Francisco, CA 94104.

 

Name		Position with WFC Holdings, LLC		Principal Occupation
Timothy J. Sloan		President; Director		Chief Executive Officer of Wells Fargo & Company
John R. Shrewsberry		Senior Executive Vice President; Chief Financial Officer; and Director		Chief Financial Officer of Wells Fargo & Company
Amanda G. Norton		Senior Executive Vice President and Chief Risk Officer		Chief Risk Officer of Wells Fargo & Company
Richard D. Levy		Executive Vice President; Director		Controller of Wells Fargo & Company
Perry G. Pelos		Senior Executive Vice President		Head of Wholesale Banking
Neal A. Blinde		Executive Vice President		Treasurer of Wells Fargo & Company
Jon R. Campbell		Executive Vice President; Director		Head of Corporate Responsibility and Community Relations

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The following sets forth the name and present principal occupation of each executive officer and director of EVEREN Capital Corporation. The business address of each of the executive officers and directors of EVEREN Capital Corporation is 301 South College Street, Charlotte, North Carolina 28202.

 

Name		Position with EVEREN Capital Corporation		Principal Occupation
Richard D. Levy		Treasurer		Controller of Wells Fargo & Company
George D. Wick		Executive Vice President		Head of Investment Portfolio
Walter Dolhare		Director		Co-Head of Wells Fargo Securities
Robert Engel		Director		Co-Head of Wells Fargo Securities
David Kowach		Director		Head of Wells Fargo Advisors
Kristi Mitchem		Director		Head of Wells Fargo Asset Management
Michael Cummings		Managing Director		Head of Wholesale Operational Risk & Compliance
Steven T. Hodgin		Managing Director		Managing Director of Wells Fargo Bank, N.A.
Steven Kiker		Managing Director		Chief Administrative Officer of Wells Fargo Securities
Eric T. Mabe		Managing Director		Executive Vice President and Managing Director of Wells Fargo Equipment Finance
Jane Workman		Managing Director		Managing Director of Wells Fargo Securities

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SCHEDULE II

LITIGATION SCHEDULE

FINRA SETTLEMENT On December 11, 2014, FINRA announced its settlement with ten firms, including Wells Fargo Securities, LLC, that had pitched for an investment banking role on a contemplated Toys R Us initial public offering in 2010. FINRA alleged that WFS violated NASD and FINRA rules by allowing its research analyst to participate in the solicitation of investment banking business and by offering favorable research coverage to induce investment banking business; and by failing to implement policies and procedures reasonably designed to prevent violations in connection with analyst public appearances. WFS neither admitted nor denied FINRAs findings but consented to a censure and payment of a $4 million fine. The fine has been paid and the matter is fully resolved.

FINRA SETTLEMENT On November 18, 2015, FINRA announced a settlement with Wells Fargo Securities, LLC involving customer trade confirmations that inaccurately reflected the capacity in which the firm acted, e.g., principal, agent, or mixed capacity. The firm neither admitted nor denied the findings and consented to a censure and payment of a $300,000 fine. The fine has been paid and the matter is fully resolved.

SEC MCDC SETTLEMENT On February 2, 2016, the SEC announced a settlement with Wells Fargo Bank, N.A. Municipal Products Group (MPG) as part of the SECs Municipalities Continuing Disclosure Cooperation (MCDC) initiative. The MCDC offered defined settlement terms to underwriters and issuers of municipal securities that self-reported potential violations of Exchange Act Rule 15c2-12 regarding municipalities continuing disclosure requirements. Seventy-two underwriters entered into settlements under the MCDC. The SEC proposed an offer of settlement regarding eight transactions MPG had self-reported, with a penalty of $440,000, which MPG accepted.

SEC ORDER On September 22, 2014, the SEC entered an order against Wells Fargo Advisors, LLC related to the firms policies and procedures to prevent the misuse of material nonpublic information. The firm admitted the SECs findings of fact, acknowledged that its conduct violated the federal securities laws and agreed to retain an independent compliance consultant to review relevant policies and procedures, as well as the making, keeping and preserving of certain required books and records. The firm agreed to a censure, a cease and desist order and a civil penalty of $5,000,000.

CLIENT IDENTIFICATION PROGRAM On December 18, 2014, FINRA announced a settlement with Wells Fargo Advisors, LLC and Wells Fargo Advisors Financial Network, LLC for an alleged violation of NASD and FINRA rules concerning the Client Identification Program and the effects of using recycled client account numbers. The use of recycled numbers was alleged to have resulted in certain accounts not having a complete review for Client Identification Purposes. WFA and WFA FiNet neither admitted nor denied FINRAs findings and consented to a censure and the payment of a $1.5 million fine. The fine has been paid and the matter is fully resolved.

MUTUAL FUND SALES CHARGE WAIVERS On July 6, 2015, FINRA announced a settlement with Wells Fargo Advisors, LLC and Wells Fargo Advisors Financial Network, LLC for an alleged violation of NASD and FINRA rules concerning application of mutual fund sales charge waivers. FINRA alleged WFA and FiNet did not reasonably supervise the application of sales charge waivers for eligible mutual fund purchases in certain retirement and charitable organization accounts. WFA and FiNet neither admitted nor denied FINRAs findings and agreed to censure and to provide remediation to eligible clients. Due to WFA and FiNets self-report of the issue and cooperation, FINRA assessed no fine. WFA and FiNet agreed to pay an estimated $15 million in restitution, including interest, to affected customers.

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FINRA/EXCHANGE REPORTING SETTLEMENTS From time to time Wells Fargo broker-dealers resolve technical trade reporting issues relating to timing and other data elements with FINRA and exchanges involving small numbers of trades processed by the firms. Resolutions of this type during the relevant period typically included fines of less than $100,000 each.

STATE OF NEW HAMPSHIRE SETTLEMENT Wells Fargo Advisors Financial Network (WFAFN) entered into a Consent Order with the State of New Hampshire on February 12, 2016 relative to due diligence concerning two customer accounts. WFAFN agreed to pay a total of $32,000 to the clients and $3,000 to the state.

LARGE OPTION POSITION REPORTING On October 13, 2016, First Clearing, LLC entered into settlement agreements with NYSE Arca, Inc. and the Chicago Board Options Exchange, Inc., without admitting or denying the allegations that it inaccurately reported position effective dates and customer name and address information for its introducing firms and failed to provide introducing firms with reasonable systems and processes for identifying accounts acting in concert. First Clearing agreed to pay a $375,000 fine to each Exchange ($750,000 total).

BOOKS & RECORDS RETENTION On December 21, 2016, FINRA announced a settlement with Wells Fargo Advisors, LLC, First Clearing, LLC, Wells Fargo Advisors Financial Network, LLC, Wells Fargo Securities LLC and Wells Fargo Prime Services LLC for alleged violations of certain record retention and supervisory provisions by failing to maintain electronically stored required records in a non-erasable and non-rewritable format. The firms neither admitted nor denied FINRAs findings and consented to a censure and the payment of a $1.5 million fine by the first three firms above (jointly), and a $4 million fine by the final two firms above (jointly). The fines have been paid. The firms also agreed to an undertaking to review, adopt and implement policies and procedures reasonably designed to comply with books and records rules.

STATE OF MISSOURI SETTLEMENT On February 16, 2017, A.G. Edwards (k/n/a Wells Fargo Clearing Services, LLC) entered into a Consent Order with the State of Missouri. The action involved a Missouri Residents claim that his ex-wife misappropriated over $300,000 out of his IRA account during the period between August 2001 and July 2007, and the State of Missouri alleged a failure by the firm to supervise the completeness and accuracy of the early IRA distribution forms associated with the withdrawals. Without admitting or denying liability, the firm consented to a censure and agreed to pay $25,672.17 to the Missouri Secretary of States Investor Education Fund to fully resolve the matter.

POSSESSION AND CONTROL OF ALTERNATIVE INVESTMENTS On November 22, 2016 First Clearing LLC entered into a settlement agreement with FINRA without admitting or denying the allegations that the firm failed to collect no-lien letters from investment sponsors, reconcile customer positions and afford the proper regulatory accounting treatment for positions held at the sponsor in First Clearing IRA accounts. First Clearing agreed to pay a fine of $750,000.

CONSOLIDATED REPORTS On December 5, 2016 Wells Fargo Clearing Services, LLC (formerly Wells Fargo Advisors, LLC) entered into a settlement agreement with FINRA without admitting or denying the allegations that the Firm failed to establish maintain and enforce a reasonable supervisory system for the use of consolidated reports generated by financial advisors. Wells Fargo Clearing Services, LLC agreed to pay a fine of $1,000,000.

FINRA SETTLEMENT On May 16, 2017, FINRA announced a settlement with Wells Fargo Clearing Services, LLC and Wells Fargo Advisors Financial Network, LLC concerning unsuitable recommendations and supervisory failures relative to sales of certain non-traditional exchange traded products (ETPs) in violation of FINRA and NASD rules for the period July 1, 2010 to May 1, 2012. Without admitting or denying the findings, the firms accepted a censure and agreed to restitution to certain clients totaling $3,411,478.78.

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FINRA SETTLEMENT On June 21, 2017, Wells Fargo Securities, LLC entered into a settlement agreement with FINRA without admitting or denying the allegations of improper reporting of conventional over-the-counter option positions under FINRA large option position reporting rules. The firm consented to a censure, payment of a $3.25 million fine, and an undertaking to review its supervisory systems related to large options position reporting.

SEC ORDER On November 13, 2017, the SEC announced that Wells Fargo Advisors, LLC agreed to settle charges that it violated Section 17(a) of the Securities Exchange Act of 1934 and Rule 17a-8 by failing to file and timely file Suspicious Activity Reports between approximately March 2012 and June 2013. Without admitting or denying the allegations, the firm agreed to a cease and desist order, a censure, and a civil penalty of $3,500,000. Wells Fargo Advisors also agreed to voluntarily undertake a review and update of its policies and procedures and develop and conduct additional training.

STATE OF ILLINOIS SETTLEMENT On December 21, 2017, Wells Fargo Advisors, LLC (k/n/a Wells Fargo Clearing Services, LLC) entered into a Consent Order with the State of Illinois regarding allegations that it received, reviewed and/or analyzed documents and information provided by a financial advisory firm concerning certain money manager strategies that contained false and misleading information. The findings stated that the firm included the financial advisory firms money manager strategies in certain of its separately managed account programs, but that the firm did not utilize inaccurate historical performance data in connection with its decision to onboard the money manager strategies and the firm did not incorporate inaccurate performance data in its advertisements or program marketing materials. Without admitting or denying the findings, the Firm agreed to a total monetary payment of $270,000.

NYSE SETTLEMENT On February 2, 2018, Wells Fargo Prime Services, LLC (WFPS) and NYSE Arca, Inc. entered into an Offer of Settlement and Consent without admitting or denying any allegations to settle charges of violations of the Securities Exchange Act Rule 15c3-5 and NYSE Arca Rule 11.18. The settlement related to an erroneous trade WFPS entered on July 29, 2016. WFPS consented to a fine of $10,000.

STATE OF NEVADA SECURITIES DIVISION RESIDENTIAL OFFICE INVESTIGATION On April 13, 2018, the Nevada Securities Division and Wells Fargo Clearing Services, LLC (WFCS) entered into an Administrative Consent Order wherein WFCS admitted to failing to register the residential offices of three Financial Advisors who were working from home. Nevadas definition of branch office includes a personal residence where securities business is transacted, even if the residence is not held out to the public or used for client meetings. WFCS agreed to pay an $8,000 fine and $1,446.13 for the costs of the examinations conducted by the Nevada Securities Division.

SEC SETTLEMENT On June 25, 2018, Wells Fargo Advisors LLC (WFA), entered into a settlement agreement with the SEC wherein, without admitting or denying liability, it settled charges of violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act. The settlement related to certain registered representatives soliciting customers to redeem, and short-term trading of, market-linked investments prematurely without adequate analysis or consideration of the substantial costs associated with the transactions. As part of the settlement, the firm consented to a censure and a payment of a $5,108,441.27 representing disgorgement, prejudgment interest, and a civil penalty. WFA also lost its Well Known Seasoned Issuer status as a collateral consequence of the settlement.

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NOTE: In addition to the above matters, certain of Wells Fargo & Companys affiliates, including Wells Fargo Clearing Services, LLC (formerly Wells Fargo Advisors, LLC), Wells Fargo Securities, LLC, Wells Fargo Advisors Financial Network, LLC and First Clearing, LLC, have been involved in a number of civil proceedings and regulatory actions which concern matters arising in connection with the conduct of its business. Certain of such proceedings have resulted in findings of violations of federal or state securities laws. Such proceedings are reported and summarized in each entitys Form BD as filed with the Securities and Exchange Commission and in other regulatory reports, which descriptions are hereby incorporated by reference.