US Labor Department launches review of all Wells Fargo complaints
Class action lawsuit already filed against bank
WASHINGTON (Reuters) – US Labor Department Secretary Thomas Perez on Monday pledged to conduct a “top-tobottom” review of all cases, complaints and other alleged violations that the department has received concerning Wells Fargo in recent years.
Perez’s announcement, outlined in a September 26 letter to Sen. Elizabeth Warren of Massachusetts, comes after Warren and other Democrats asked the Labor Department last week to launch a probe into possible wage and working-hour law violations involving Wells Fargo tellers and sales representatives who may have stayed late to meet sales quotas.
“Given the serious nature of the allegations, the recent actions of our federal partners, and recent media reports, I have directed enforcement agencies within the Department to conduct a top-to-bottom review,” he wrote.
He also said the department has created a web page at www.dol.gov/wellsfargo to help ensure current and former Wells Fargo employees are aware of worker protection laws.
Wells Fargo was ordered to pay $190 million earlier this month to settle civil charges alleging its employees had set up about 2 million accounts and credit cards in customers’ names that may not have been authorized.
A Wells Fargo spokeswoman could not be immediately reached for comment after the close of business Monday but the company previously apologized to affected customers and said it fired 5,300 employees over “inappropriate sales conduct.”
The Consumer Financial Protection Bureau alleged that the opening of these accounts was driven by a system that financially rewarded employees.
Federal prosecutors have since launched a criminal probe into the issue, a source previously told Reuters.
The Labor Department polices a variety of things, including wage and hour rules, workplace safety, whistleblower protection laws and employee benefit plans.
Perez said that the department’s Occupational Safety and Health Administration (OSHA) has received a number of whistleblower complaints from Wells Fargo employees over the past five years.
Most of those complaints are concluded, with some settling and others found to have no merit, he said. Others are still currently under investigation, he added.
“I have asked OSHA to review the entire docket of both closed and open Wells Fargo cases since 2010,” he said.
Sen. Warren, in a statement to Reuters, welcomed the department’s review.
“Every other federal agency with jurisdiction in this matter should follow DOL’s lead and promptly determine whether Wells Fargo and its senior executives should be prosecuted or otherwise sanctioned,” she said.
In other recent news, Wells Fargo was hit on Monday with a class action lawsuit over sales practices. It alleges that the firm misled investors about its financial performance and the success of its sales practices.
Wells Fargo is the United States’ third-largest bank by assets.
Robbins Geller Rudman & Dowd LLP announced the lawsuit and is seeking class action status on behalf of buyers of the company’s shares between February 26, 2014 and September 15, 2016.
The lawsuit, which was filed in the US District Court of Northern California, comes nearly a week after Wells Fargo chief executive John Stumpf faced US Senate lawmakers about his oversight at the bank.
It also singled out Stumpf and Carrie Tolstedt, the now-retired executive at the center of the scandal, for selling more than $31 million of their stock in Wells Fargo at “artificially inflated” prices.
Wells Fargo has said its board will assess whether to cancel or claw back any incentive compensation paid to Tolstedt.
The complaint also criticizes the firm’s cross-selling strategy, saying it failed to disclose material facts about its practices that were aimed at fulfilling sales quotas.
Wells Fargo has long been the envy of the banking industry for its ability to sell multiple products to the same customer.
The San Francisco-based bank has said it has fired 5,300 people over the matter and would eliminate sales goals in its retail banking on January 1, 2017.
In recent days, shares of the company have fallen more than 10% since September 8 when it reached a settlement with regulators, wiping off more than $25 billion of market capitalization.