Reps Fired by Wells Fargo Asked to Call FINRA

This came after Sens. Elizabeth Warren, Ron Wyden and Bob Menendez asked Wells Fargo about its response to unauthorized accounts and its FINRA disclosures of details related to fake accounts; they gave the bank until Dec. 5 to reply. At the time, Wells Fargo had disclosed that some 5,300 employees were fired over their involvement in the scandal.

The apparent incomplete nature of the bank’s U-5 filings may have deprived regulators of details that might have helped them uncover and stop the “illegal activity” sooner, the senators argued.

In their letter, the senators say the bank filed close to 18,000 U-5 forms from 2011 to 2015 and that close to 20% — about 3,355 out of roughly 17,750 – were for employees listed as “discharged,” “permitted to resign” or “other” (which includes “failure to perform job duties”).

The senators explain that FINRA told them “slightly more than 600 of those 5,300 [fired] persons were registered at various times with [Wells Fargo Advisors …] between 2011 and early 2016, and … 207 of them were specifically terminated for issues that fall within the scope of the [$185 million Consumer Financial Protection Bureau] order.”

They also point out that of the remaining 400 FINRA-registered employees fired by Wells Fargo, it “is not clear if the bank filed U-5s at all.” FINRA staff told the senators that its review of the matter is “in its early stages” as it awaits further information from the bank.  

In their six-page letter to President & CEO Tim Sloan, the senators note that information recently obtained from FINRA “confirm that Wells Fargo had ample information about the scope of fraudulent sales practices occurring at the bank long before the CFPB settlement, and they raise additional questions about Wells Fargo’s response to this illegal activity.”

(Wells Fargo is set to pay $185 million to resolve the issue with the Consumer Financial Protection Bureau.)

The ongoing attention on Wells Fargo “has most recently focused in part on licensed bankers that work in retail bank branches. Licensed bankers meet with bank customers and help identify their financial needs. These licensed bankers are employed by Wells Fargo’s retail bank and are required by FINRA to be licensed in order to carry out and be compensated for their activities. As such, Wells Fargo is required to notify FINRA when these team members are terminated or voluntarily leave Wells Fargo,” the bank stated.

In other news, Wells Fargo said in November that its possible litigation losses could reach up to $1.7 billion vs. its earlier estimate of $1 billion. It also has added the Securities and Exchange Commission to a list of agencies investigating its sales practices disclosures, according to regulatory filings.

— Related: 

• Wells Fargo Facing SEC Probe That Could Focus on Disclosures
• Senators Challenge Wells Fargo Over Fired Employees