Wells Fargo & Co., the lender that lost its status as the world’s most valuable bank this week, fell for a fifth day in New York trading after reports that the Justice Department is investigating sales practices that led to the opening of 2 million unauthorized accounts.
The bank dropped 1.8 percent to $45.67 at 9:52 a.m., compared with a 0.2 percent increase for the 24-company KBW Bank Index. The shares are down 8.3 percent from the close on Sept. 7, the day before San Francisco-based Wells Fargo settled allegations that it opened credit-card and deposit accounts for customers without their approval. The KBW Index is down 1.7 percent for the same period.
U.S. attorneys in New York and San Francisco have opened criminal inquiries, a person familiar with the matter said Wednesday. Under Justice Department guidelines, investigators will look into both potential corporate and individual wrongdoing, the person said. The bank’s $185 million settlement with regulators included a record $100 million fine to the Consumer Financial Protection Bureau and $35 million to the Office of the Comptroller of the Currency, the two federal regulators that investigated the bank. The amount also includes $50 million to the Los Angeles city attorney in civil penalties.
(Related on ThinkAdvisor: Wells Fargo Fined $185M for Opening Secret Unauthorized Accounts)
News that the Justice Department is investigating Wells Fargo “is likely to prolong the story and create political distractions, including more congressional hearings,” Jaret Seiberg, an analyst at Cowen & Co., wrote Thursday in a note to clients. “We believe this is a long-term headache for Wells Fargo even if the Justice Department does not bring a case.”