Wells Fargo reportedly near $3 billion settlement with SEC and DOJ over sales scandal

  • The settlements could be announced as soon as Friday, though the size of the penalties could not be immediately determined, The New York Times reported.
  • Whether government lawyers plan to level criminal charges against individuals connected to the bank was also unclear.
  • Wells came under scrutiny starting in 2016 after multiple regulatory bodies fined the company for creating millions of factitious accounts to meet lofty sales goals.

Wells Fargo is nearing settlements with the Securities and Exchange Commission and the Justice Department over its extensive customer abuse in its banking and lending businesses, according to a New York Times report.

The settlements with federal prosecutors could be announced as soon as Friday and include a penalty of about $3 billion, according to a separate report from Dow Jones.

Whether government lawyers plan to level criminal charges against individuals connected to the bank was unclear.

The settlements would represent the latest government penalties against the bank and its former leaders for scandals in which millions of fake accounts were set up to meet sales quotas.

Last month the Office of the Comptroller of the Currency said that former Wells Fargo CEO John Stumpf has been banned from ever working at a bank again and that he will pay $17.5 million for his role in the controversy.

The nation’s fourth-largest bank, Wells Fargo has remained muddled in restructuring and regulatory reforms since 2016 stemming from the scandals at its consumer-facing community bank. Wells came under intense scrutiny starting in 2016 after multiple regulatory bodies fined the company for creating millions of factitious accounts to meet lofty sales goals.

Though management at first insisted a malfeasant few branch workers were responsible for the problem, the blame later shifted to top-down pressures from management to open as many accounts as possible via aggressive cross-selling.

The ensuing fallout has had lasting consequences for the San-Francisco-based bank, once a rapidly growing lender with eye-popping profits. In recent years, however, Wells has stalled between stagnant revenue and an urgent need to cost cut.

The bank’s fourth-quarter profit report showed earnings declined 53% from the year-ago period and that Wells booked a $1.5 billion charge for legal costs associated with litigation from the fake account scandal.

New Wells Fargo CEO Charlie Scharf told the bank’s employees that recent government action against Wells “are consistent with my belief that we should hold ourselves and individuals accountable.”

“They also are consistent with our belief that significant parts of the operating model of our Community Bank were flawed,” he added in January. “At the time of the sales practices issues, the Company did not have in place the appropriate people, structure, processes, controls, or culture to prevent the inappropriate conduct.”

— Click here to read the original New York Times report.

Subscribe to CNBC PRO for exclusive insights and analysis, and live business day programming from around the world.

Source: https://www.cnbc.com/2020/02/21/wells-fargo-reportedly-near-settlements-over-sales-scandal.html

You may like

In the news
Load More