Wells Fargo agrees to pay $3bn fine for fraudulent account furore
Wells Fargo has agreed to pay $3 billion to settle a long-lasting investigation into the fraudulent opening of millions of customer accounts.
The bank, fourth-largest in the US, will pay the hefty fine to both the US Department of Justice (DOJ) and the Securities and Exchange Commission (SEC).
The SEC will receive around $500 million of the total figure, which it plans to use to offer restitution to customers defrauded by the bank.
Wells Fargo was found to have pressured employees to cross-sell products and services, leading them to create millions of fake accounts using forged and fraudulent customer signatures.
Employees of the bank were found to be using their own contact details on application forms, so as to ensure that the real customer was never informed about the accounts opened in their name.
Stephanie Avakian, co-director of the SEC’s division of enforcement, says that Wells Fargo “repeatedly misled investors, including through a misleading performance metric, about what it claimed to be the cornerstone of its Community Bank business model and its ability to grow revenue and earnings.
“This settlement holds Wells Fargo responsible for its fraud and furthers the SEC’s goal of returning funds to harmed investors.”
Charlie Scharf, CEO of Wells Fargo, says that “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.
“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.”
Scharf joined the bank in October 2019, and vowed that he would clean up Wells Fargo’s reputation and focus on the future when he took the hot seat.
John Stump, the CEO when the scandal first emerged, agreed to pay a $17.5 million civil fine and has been banned by the Office of the Comptroller of the Currency from any future positions at US banks.
The OCC has also charged seven other former Wells Fargo executives with penalties totalling almost $60 million.
The US bank has also been in hot water for the infringing of patents filed by the United Services Automobile Association (USAA). It was ordered to pay $200 million in damage by a Texas district court.
In a release, the bank says that “fundamental changes” have been made to its leadership, governance, processes, controls, and culture.