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February 21, 2020 at 05:22 PM
A Wells Fargo branch in New York (Photo: Bloomberg)
Wells Fargo agreed to pay $3 billion to resolve potential criminal and civil charges tied to its fake-accounts scandals, the Department of Justice and Securities & Exchange Commission said late Friday.
As part of the agreements, the bank admitted that it collected millions of dollars in fees and interest to which it was not entitled, harmed credit ratings of clients and unlawfully misused sensitive personal information, including clients’ means of identification, the DOJ said in a statement.
The practices date from 2002 to 2016, when Wells Fargo pressured “employees to meet unrealistic sales goals that led thousands of employees to provide millions of accounts or products to customers under false pretenses or without consent, often by creating false records or misusing customers’ identities,” the DOJ added.
The criminal investigation of Wells Fargo’s records and identity theft is being resolved via a deferred-prosecution agreement in the which the bank will not be prosecuted during the three-year term of the agreement “if it abides by certain conditions, including continuing to cooperate with further government investigations,” according to the DOJ.
“This settlement holds Wells Fargo accountable for tolerating fraudulent conduct that is remarkable both for its duration and scope, and for its blatant disregard of customers’ private information,” said Deputy Assistant Attorney General Michael D. Granston of the DOJ’s Civil Division, in a statement.
For its part, Wells Fargo CEO Charlie Scharf remarked: “The conduct at the core of today’s settlements — and the past culture that gave rise to it — are reprehensible and wholly inconsistent with the values on which Wells Fargo was built.”
“While today’s announcement is a significant step in bringing this chapter to a close, there’s still more work we must do to rebuild the trust we lost. We are committing all necessary resources to ensure that nothing like this happens again, while also driving Wells Fargo forward,” Scharf added.
In the fourth quarter of 2019, the bank had profits of $2.87 billion vs. $6.06 billion in the year-ago period; it set aside $1.5 billion in the Q4’19 for legal expenses. Revenues were $19.86 billion.
Public Citizen, a consumer watchdog group, criticized the settlement, saying in a statement: “Any resolution for Wells Fargo’s massive, management-directed misconduct must hold individuals to account. … Wells Fargo’s fake account scandal is as clear and understandable as pick-pocketing.”
“Criminal violations should be deterred through criminal enforcement actions, not deferred prosecution agreements where managers agree to institutional financial penalties and hollow promises,” the group added. “Protecting Wells Fargo from the consequences of its wrongdoing is not the DOJ’s job.”
