For retail brokerage firms like Wells Fargo Advisors, LLC, fka Wachovia Securities, Inc., abandoned property is not only a big commitment to a firm, but one that offers little if any financial incentive to the staff.  This, in part, is a recipe for a "license, or invitation, for a knowledgable staff person to steal." Responsibility for abandoned property often is assigned to the Escheatment Group, or to internal audit personnel - and its activities, if any, largely go undetected. By their very nature, most abandoned accounts have little or no value, and typically are dormant.  Customers or beneficiaries commonly walk away from accounts that hold worthless securities, and in other cases, customers die off or move away without a record of accounts they left behind - even when the accounts hold securities and/or cash balances of value. Then, there's a second line of defense - namely, supervisory personnel.  But they often are as worthless as the securities in the accounts.  That's because they pay little heed to the accounts, knowing there's little, if any, financial incentive to them - and because monitoring these 'dormant accounts is akin to "watching the grass grow." Which means that any observant staff person can easily target an account with assets on hand - then follow the firm's own policies and procedures to "legally" retrieve the assets and walk away with "loot." FINRA Findings and Allegations. FINRA finds that, according to its WSPs, Wells Fargo Advisors considered an account abandoned after the firm has received 3 returned account statements from the postal service.  That is not the problem or deficiency with the system.  Rather, the issues begin with the process for restoring abandoned accounts to active status.  Here are a handful of significant gaps in the firm's procedures and inherent controls.

• To initiate a change in status, a broker would send a written request to Escheatment.  Upon receipt of the written request, and based solely on the representations made in the request, Escheatment then restores the account to an active status.  However, they only notify the requestor as to the change in status.
• A second deficiency is that the WSPs do not identify who at the firm is authorized to submit requests to have abandoned accounts restored or released.  Rather, Escheatment is instructed to accept such requests from personnel who work in the branch office where the abandoned account was last serviced.
• The WSPs do not require the requestor to obtain supervisory approval before submitting requests to have abandoned accounts restored or released from abandoned status.
• The WSPs do not require the requestor to submit proof that a customer had been located.
• The WSPs do not require the requestor to submit proof of the customer’s new address.
• The WSPs do not require that Escheatment notify branch office managers when accounts are restored to active status.

Instead, restoration of an abandoned account simply requires the requestor to submit a change of address request with the customer’s new address to the firm’s New Accounts Group.  Upon receipt of the address change requests, the firm changed the address of record of the restored account and sent letters confirming the change of address to both the customer’s new and old address.  But that control procedure has its flaws, because the old address is invariably invalid. Case in Point - Manager Accepts Invitation to Steal. FINRA found that, in one instance, the deficient procedures facilitated a firm operations manager’s conversion of about $850,000 from 11 customer accounts for her personal use - which, of course, escaped detection. FINRA Sanctions. Wells Fargo Advisors was censured and fined $350,000.   For further details, go to:   [FINRA AWC #2009020630701]. [Disciplinary Actions for December 2011]