Wells Fargo pays $37.3m to settle US foreign exchange lawsuit
Major US bank Wells Fargo has paid $37.3 million to settle a Justice Department lawsuit claiming it overcharged commercial customers.
Wells Fargo will pay a total of approximately $72.6 million, with around $35.3 million having been paid directly to the 771 customers collectively as restitution.
The $37.3 million is to be paid to the US as civil penalties under the Financial Institutions Reform Recovery and Enforcement Act (FIRREA) and as asset forfeiture.
According to the suit, Wells Fargo defrauded 771 of its business customers on foreign exchange transactions between 2010 and 2017.
The bank admitted that during this time many of its FX sales specialists applied larger sales margins or spreads than they represented they would.
When contacted by concerned customers about increased pricing, the specialists would then give false explanations.
FX specialists also internally discussed and “celebrated” transactions which resulted in spreads larger than the customer intended.
Wells Fargo says it took adverse employment actions against more than 20 employees involved in the FX business.
“We all put trust in our banking institutions to deal with us honestly, fairly, and transparently when we are their customers,” says Audrey Strauss, US Attorney for the Southern District of New York.
“For the better part of a decade, Wells Fargo abused this trust, using tricks, false information, and other deceptive practices to fraudulently overcharge customers.”
The news follows calls from US senator Elizabeth Warren for the breaking up of Wells Fargo.
Warren wrote to the Federal Reserve chair, Jerome Powell, calling on the central bank to split Wells Fargo’s banking and financial services businesses.