Wells Fargo bank branch in New York. (Photo: Bloomberg) A Wells Fargo bank branch in New York. (Photo: Bloomberg)

Following a report Friday in The Wall Street Journal, a Wells Fargo executive insists that a legal team hired by its board — and not the FBI — has been asking wealth-unit employees questions about some of its practices. Nonetheless, at least one industry recruiter says the publicity is causing more advisors to seriously consider leaving the firm.

(Related: Clayton: SEC Fiduciary Rule on Track Despite DOL Court Defeat)

“More and more [advisors] have called me” about switching firms, said Danny Sarch of Leitner Sarch Consultants, in an interview. At the start of the month, when Wells Fargo revealed its own review of certain wealth management irregularities, Sarch received three calls.

On Friday, the Journal reported that the FBI had interviewed some wealth-unit employees in Phoenix, prompting the unit to “review the matter internally and discuss it with Shearman & Sterling, which is acting as counsel to our board of directors,” explained Jonathan Weiss, a senior vice president in Wealth and Investment Management, in a memo shared with ThinkAdvisor (following an initial report in InvestmentNews).

“As a result of that review and discussion, we are confident none of our team members in Wealth and Investment Management was interviewed by the FBI, as described by The Wall Street Journal. We have learned some interviews did occur recently in Phoenix, but these were conducted solely by Shearman & Sterling as part of its independent review,” Weiss said.

The executive acknowledged that the wealth unit is now in the spotlight more than ever, following 18 months of attention on fraudulent accounts and other issues at its retail bank.

“We all appreciate how difficult it is to take questions from clients and team members in this environment of heightened media scrutiny,” he stated. “Let’s remain calm, stay in front of our clients, and continue to excel at the important business of protecting and growing their hard-earned savings and helping them achieve their financial goals.”

The Justice Department and Securities and Exchange Commission are looking into some overcharges and incorrect wealth management fees, as well as possibly “inappropriate” referrals and recommendations affecting 401(k) rollovers, the Journal reported earlier this month. Employees have pointed to issues with the bank’s own investment products, according to the paper.

“It’s a big deal. Clients are commenting on this to advisors … since it’s the first time the [problems] have happened in wealth management,” Sarch said.

Still, he explained, “It’s good [Weiss] set the record straight.”

When news broke about FBI’s involvement, “I thought there would either be more to the story or that it could be B.S. Then came the memo, which makes sense,” Sarch added.

The latest details about the wealth-unit investigation come just days after Wells Fargo said CEO Tim Sloan received a 36% bump in pay to $17.4 million — a move heavily criticized by Sen. Elizabeth Warren and others — and about one month after the Federal Reserve barred the bank from growing its balance sheet.

Through March 20, Wells Fargo shares are down about 10%.

Massachusetts securities regulators have opened an investigation of Wells Fargo Advisors to better understand the extent of problems revealed by the bank in early March.

Specifically, they aim to better grasp the extent of inappropriate referrals of brokerage clients to managed and advisory accounts, unsuitable recommendations of alternative investments, as well as unsuitable referrals and recommendations tied to 401(k) rollovers.

“Wells Fargo’s recent banking scandal, which involved opening bogus accounts for their customers, leads me to believe that where there is smoke, there’s fire,” said Commonwealth Secretary William Galvin, the state’s top securities regulator, in a statement. “I need to be assured that Massachusetts residents haven’t been burned by corporate greed.”

Wells Fargo Advisors includes about 14,500 registered representatives.

— Check out DOJ Expands Sales Review to Wells Fargo Wealth Unit: Report on ThinkAdvisor.