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Senators Ask Wells Fargo CEO to Explain Alleged Fraud Cover-Up

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Six members of the Senate Banking Committee are asking Wells Fargo CEO Tim Sloan about reports that the bank may have shred and even forged documents tied to its fake accounts scandal.

“These latest allegations by Wells Fargo employees raise yet another red flag indicating that top management and the board of directors of Wells Fargo knew or should have known about the extensive fraud occurring throughout the bank,” wrote Sen. Bob Menendez, D-N.J., and five of his colleagues, including Sen. Elizabeth Warren, D-Mass.

“We are troubled by the possibility that Wells Fargo’s retail bank branch managers engaged in activities that made it easier to conceal fraudulent practices that hurt both customers and employees,” they explained.

Sloan is asked to give his answers to 15 questions by Feb. 17.

This news comes less than a week after Warren asked the Department of Labor for an update on its investigation into Wells Fargo & Co.’s sales practices; she and others were unable to access a website the DOL had set up to track complaints from the bank’s employees.

In their letter to Sloan, the senators refer to a Wall Street Journal report that branch employees were allegedly asked to work late in order to shred and doctor documents after managers received word that their branches would be visited by internal compliance officers.

“We are also concerned that Wells Fargo’s internal review system was allowed to operate with serious flaws for years, remains flawed, and lacks appropriate controls to prevent future harm to the bank’s customers,” the senators said in the letter. “It is also not clear precisely when senior management or the board became aware of these issues.”

Wells Fargo was fined $185 million for violations of regulations related to its unauthorized opening of about 1.5 million deposit accounts and 565,000 credit card accounts, the legislators add. It also paid a $20 million penalty to the Treasury Department.

“Thousands of mostly low-level Wells Fargo employees were fired as a result of the fraud despite evidence that senior managers knew or should have known about the fraud,” they stated.

The senators signing the letter, in addition to Menendez and Warren, include Sherrod Brown, D-Ohio; Chris Van Hollen, D-Md.; Catherine Cortez Masto, D-Nev.; and Jack Reed, D-R.I.

The legislators end their letter to by asking Sloan, a 29-year veteran of Wells Fargo, about his knowledge of early warnings being given to branch staff prior to internal reviews and of the destruction or concealment of evidence.

According to a statement from Wells Fargo released Wednesday, the bank plans to end the policy “that allows branches to get advance notice before annual visits by internal reviewers, which was originally in place so each bank could ensure it is staffed to assist with the review and maintain customer experience.”

The bank also says that for roughly a decade it “has pulled digital copies of new account forms and signature cards to review them in advance of branch visit reviews with no advance notice to team members,” adding that it continues to “take a hard look at all our processes, and look forward to addressing the senators’ concerns.”

— Check out Wells Fargo’s Sloan Played Role in Pre-Scandal Exit of Retail Bank Chief on ThinkAdvisor.


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