USA TODAY US Edition
Feds investigating Wells Fargo
Company hit with $185M in fines last week
Amid national criticism over improper sales practices that triggered $185 million in fines, Wells Fargo now faces investigation by federal prosecutors.
The U.S. Attorney’s Offices for the Southern District of New York and the Northern District of California are in the first stages of an examination that eventually could result in federal court action, a U.S. official familiar with the matter said Wednesday, confirming an initial report by The
Wall Street Journal.
The official, who characterized the action as a preliminary review to determine if there is a criminal or civil case to pursue, spoke on condition of anonymity because the matter has not been publicly disclosed.
The investigation comes a week after Wells Fargo, one of the nation’s largest banks, was hit with $185 million in civil penalties for secretly opening millions of unauthorized deposit and credit card accounts that harmed thousands of customers.
During a five-year period, the bank fired roughly 5,300 employees and managers for opening the accounts without customers’ knowledge or approval as part of a bid to meet sales targets, Wells Fargo confirmed.
Representatives of the San Francisco-based banking giant did not respond to a message seeking comment. The New York City office of U.S. Attorney Preet Bharara declined to comment. Abraham Simmons, a spokesman for the San Francisco office of U.S. Attorney Brian Stretch, said he could neither confirm nor deny the existence of an investigation.
Wells Fargo shares closed down nearly 1% at $46.52 Wednesday.
Last week’s fines were imposed under settlements Wells Fargo reached with the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency and the Los Angeles city attorney’s office.
The CFPB has legal authority to refer the findings to federal prosecutors. David Mayorga, a spokesman for the regulator, said Wednesday he could not discuss whether such a referral had been made.
Wells Fargo neither admitted nor denied last week’s civil findings, and no top executives were penalized. CEO John Stumpf said the bank had no improper sales incentives and blamed employees for the unauthorized accounts,
The Wall Street Journal reported Wednesday.
However, media organizations have reported that Carrie Tolstedt, the bank executive who oversaw the unit that created the unauthorized accounts, is retiring from Wells Fargo with a golden parachute package of benefits worth $124.6 million.
As public questions and criticism of the bank’s conduct mounted this week, many investors sold. Wells Fargo this week lost the title as the most valuable U.S. bank for the first time in three years. The company now ranks second behind JPMorgan Chase.
Wells Fargo on Tuesday said it would end banking product sales goals in December in a bid to rebuild customer confidence.