Wells Fargo in $3B Settlement with Feds
February 21, 2020
Wells Fargo & Co. has entered into agreements with the U.S. Department of Justice (DOJ) and the U.S. Securities and Exchange Commission (SEC) to resolve investigations by the agencies into accusations of fraudulent retail banking practices, including the false records or misusing customers’ identities. The San Francisco-headquartered company will pay $3 billion to settle federal charges.
“The conduct at the core of today’s settlements — and the past culture that gave rise to it — are reprehensible and wholly inconsistent with the values on which Wells Fargo was built,” said CEO Charlie Scharf. “Our customers, shareholders and employees deserved more from the leadership of this company. Over the past three years, we’ve made fundamental changes to our business model, compensation programs, leadership and governance. While today’s announcement is a significant step in bringing this chapter to a close, there’s still more work we must do to rebuild the trust we lost. We are committing all necessary resources to ensure that nothing like this happens again, while also driving Wells Fargo forward.”
Wells Fargo has faced criticism since 2016 when it revealed that it created millions of fake customer accounts in order to meet its sales goals. Among the allegations resolved in the settlement were Wells Fargo’s incorrect charges to customers for mortgage rate lock extension fees, as well as the improper referral of customers for enrollment in third-party renters and life insurance policies and the enrollment of customers in online banking services without their knowledge or consent.
In December 2018, Wells Fargo reached an agreement with the Attorneys General of all 50 states and the District of Columbia to pay $575 million in settling charges of state consumer protection laws.
“This case illustrates a complete failure of leadership at multiple levels within the bank,” said U.S. Attorney Nick Hanna. “Simply put, Wells Fargo traded its hard-earned reputation for short-term profits, and harmed untold numbers of customers along the way. We are hopeful that this $3 billion penalty, along with the personnel and structural changes at the bank, will ensure that such conduct will not reoccur.”
Today’s resolution includes an agreement by Wells Fargo to establish of a $500 million Fair Fund for the benefit of investors who were harmed by the conduct covered in the agreement. The Fair Fund is part of the $3 billion settlement.
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