Wells Fargo will pay $125 million in fines to the Securities and Exchange Commission after employees were found to be using WhatsApp or personal text messages and emails to conduct business that legally needed better record-keeping, regulators said Tuesday, adding to the long list of legal run-ins the company has had.
A Wells Fargo bank sign is shown in Langhorne, Pennsylvania, March 14, 2022. (AP Photo/Matt Rourke, ... [+]
The Occupational Safety and Health Administration ordered Wells Fargo to pay $5.4 million to a former Wells Fargo employee and whistleblower who was illegally fired in 2010 after reporting potential fraud to a hotline (Wells Fargo denied the allegation).
Wells Fargo paid out $6.5 million to settle a lawsuit with the Navajo Nation, which accused the company of “predatory and unlawful practices” after it allegedly opened accounts in the names of tribal members without permission, specifically taking advantage of the tribe’s elderly and those who don’t speak fluent English.
Perhaps the company’s most notorious scandal, Wells Fargo employees were caught creating millions of savings and checking accounts for customers without their knowledge or approval after being pushed by their superiors to cross-sell products and meet quotas, ultimately culminating in a $3 billion settlement paid to the Department of Justice (Wells Fargo eventually admitted to this).
Wells Fargo paid the Department of Justice $37.3 million to settle claims that the company fraudulently overcharged commercial clients, particularly small businesses and mom-and-pop shops, on foreign exchange services (Wells Fargo denied the allegation).
Federal civil rights prosecutors reportedly launched an investigation into Wells Fargo centered around suspicions that the company was holding fake job interviews with Black and female candidates even though those jobs had already been promised to other candidates to fulfill its diversity policies (Prosecutors have not yet announced an outcome to this investigation).
The Department of Labor fined Wells Fargo $22 million for allegedly firing another whistleblower because the employee reported concerns to management that colleagues were falsifying customer information, engaging in price-fixing and colluding on interest rates (Wells Fargo denied the allegation.).
An investigation from the Department of Labor allegedly discovered the company was overcharging its current and former employees for the company’s stock in their 401(k) accounts, resulting in Wells Fargo agreeing to pay about $131.8 million to the affected employees and about $13.2 million in penalties to the Department of Labor (Wells Fargo denied wrongdoing).
The Consumer Financial Protection Bureau ordered Wells Fargo to pay $2 billion in refunds to over 16 million customers—as well as $1.7 billion in penalties—for charging illegal fees and interest on auto and mortgage loans, incorrectly repossessing customers’ cars, mismanaging auto and mortgage loan payments, charging illegal surprise overdraft fees and applying “other incorrect charges” to checking and savings accounts (the agency called Wells Fargo a “repeat offender” and Charlie Scharf, the bank's chief executive officer, said in a statement that the payment was “an important milestone in our work to transform the operating practices at Wells Fargo” and that it “put these issues behind us").
The Federal Reserve and Treasury Department fined Wells Fargo $97.8 million after it allowed an unnamed foreign bank to make hundreds of millions of dollars in transactions on its Eximbills financial platform despite being prohibited from doing so due to U.S. sanctions against Iran, Syria and Sudan (Wells Fargo told Forbes at the time that it “voluntarily self-reported and fully cooperated”).
After being sued by a group of shareholders who alleged that the company mishandled the cleanup of its phony account scandal that was settled in 2020, Wells Fargo agreed to pay a $1 billion settlement to end the class action suit.
Wells Fargo’s most recent fines—paid to the SEC for illegally using WhatsApp and personal messaging to conduct business—is part of a larger crackdown on Wall Street firms’ failure to keep consistent records, which the agency requires for audits and investigations. In addition to Wells Fargo, BNP Paribas agreed to pay $35 million, the SEC said Tuesday. They will both also pay $75 million each due to similar violations committed by their derivatives brokers, the Commodity Futures Trading Commission said. Wells Fargo and BNP Paribas are the latest to get caught up in a sprawling probe of how trading firms communicate and keep records. Last September, the SEC announced $1.1 billion of fines against Bank of America, Citigroup, Goldman Sachs and others.
$2.5 billion. That’s how much money in total has been paid in fines as part of the SEC’s probes into messaging practices, according to Bloomberg. That makes it one of the biggest law enforcement efforts in the U.S. this decade.
While Wells Fargo, the country’s fourth-largest lender, is not alone in allegedly violating rules on how it must communicate and keep records, some of its other scandals shook the industry, particularly the fake accounts scandal, which saw more than 5,000 employees fired and one executive plead guilty with the potential to go to prison. Still, many other U.S. banks are regularly forced to pay fines and fees. Wells Fargo has paid $27.3 billion in penalties for various offenses since 2000, according to Violation Tracker. For comparison, Violation Tracker reports that JPMorgan Chase, the country’s largest lender, has paid out $39 billion, while Bank of America (the country’s second-largest) and Citigroup (the country’s third-largest) have paid out $87.2 billion and $26.9 billion respectively.
In a statement to Forbes about Tuesday’s payments to the SEC, a Wells Fargo spokesperson said “We’re pleased to resolve this matter.” She declined to comment on Wells Fargo’s broader history of fines and settlements for alleged illegal actions, instead pointing to previous releases from the company, including its latest annual report, which said the company does not view fines “as a cost of doing business,” but rather “aim[s] both to avoid the necessity of such action by doing the work ourselves and, when regulators do take enforcement action against us, we follow a disciplined process to work towards closure.” It acknowledged that “the negative impact on our reputation of having not fulfilled our obligations is clear” and “failure to satisfy our regulatory requirements carries significant consequences for our company.”
Wells Fargo Pays Navajo Nation $6.5 Million In ‘Predatory’ Lawsuit Settlement (Forbes)
Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal (Forbes)
Feds Reportedly Launch Criminal Probe Into Wells Fargo Following Allegations Of Sham Job Interviews (Forbes)
Wells Fargo Shells Out $145 Million To End Feds’ 401(k) Investigation (Forbes)
U.S. Fines Wells Fargo Nearly $100 Million For Sanctions Violations (Forbes)