Even more trouble for bank after data leaks
Regulators move in yet again
WELLS Fargo, already in the regulatory spotlight because of last year’s fake-account scandal, is drawing renewed scrutiny following a lawyer’s unauthorised release of sensitive client details for tens of thousands of accounts belonging to wealthy customers of its brokerage unit.
According to a person with knowledge of the matter, regulators have started asking questions about the breach after the data was mistakenly provided to an attorney as part of a lawsuit involving two brothers, one a Wells Fargo employee and the other a former employee. A person briefed on the matter said Wells Fargo has determined the accounts were all from one brokerage branch in the North-east.
Representatives of the Financial Industry Regulatory Authority informally contacted at least one of the attorneys involved in the dispute for information about how the breach occurred and how Wells Fargo failed to detect it, said the person, who asked not to be identified because the matter isn’t public. Lawyers for the bank are taking steps to contact regulators about the data breach, according to another person with knowledge of the matter. The person didn’t specify which agencies.
Ray Pellecchia, a spokesman for Finra, which licences and supervises Wall Street workers including financial advisers, didn’t have an immediate comment. Judith Burns, a spokeswoman for the Securities and Exchange Commission, declined comment. Representatives for the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency didn’t respond to messages seeking comment.
While this latest black eye may not rise to the level of the retail-bank debacle, it further calls into question Wells Fargo’s ability to manage its
Detail was received on a “well-known billionaire” with at least $23m invested in the bank.
people and information.
“Wells Fargo takes the security and privacy of our customers’ information very seriously,” the bank said. “We are currently taking legal action to ensure the additional data is not disseminated, and we are requesting its rapid return. We continue to thoroughly investigate this matter and will take the proper steps, including corrective action, based on the outcome of our investigation.”
The bank’s latest troubles come just 10 months after regulators disclosed that Wells Fargo employees had been opening potentially millions of accounts in its retail banking division without customers’ permission over half a decade. The bank’s stock valuation and reputation were tarnished, and Wells Fargo has spent at least $520 million (R6.7bn) on fines, remediation, consultants and civil litigation since, including a near-final $142m to consumers who accused the bank of creating bogus accounts.
The OCC, the bank’s main regulator, said in September Wells Fargo had “failed to provide sufficient oversight” of its sales programmes and didn’t adequately monitor employees in its retail bank. Part of the consent order the OCC forced the bank to carry out afterward included beefing-up internal controls and risk management.
The recent data breach began with a financial spat between a pair of brothers about less than $1 million. Gary Sinderbrand, a former managing director at Wells Fargo Advisors, is engaged in two legal actions against his older brother Steven Sinderbrand, a managing director at the bank.
Lawyers for Gary Sinderbrand received client names, Social Security numbers and account balances earlier this month for 50 000 Wells Fargo accounts, including a file with details on the holdings of a “well-known hedge fund billionaire” with at least $23 million invested.
Wells Fargo signage displayed on the exterior of a bank branch in Dallas, Texas. Wells Fargo is coming under a lot of pressure for security breaches.