The Mercury News

Wells Fargo to pay $3B to settle fake accounts probe.

Fine includes a $500 million civil payment to SEC for investors

- By Ken Sweet

NEW YORK — Wells Fargo agreed Friday to pay $3 billion to settle criminal and civil investigat­ions into a long-running practice whereby company employees opened millions of unauthoriz­ed bank accounts in order to meet unrealisti­c sales goals.

Since the fake-accounts scandal came to light in 2016, Wells has paid out billions in fines to state and federal regulators, reshuffled its board of directors and seen two CEOs and other toplevel executives leave the company.

The $3 billion payment includes a $500 million civil payment to the Securities and Exchange Commission, which will distribute those funds to investors who were impacted by Wells’ behavior.

Before the scandal broke, Wells Fargo was considered to have a sterling reputation among the big banks. The bank referred to its branches as “stores,” and once had a policy of trying to get each Wells Fargo customer to have eight financial products with the company

Wells’ sales policies, pushed by top management, were aggressive and unrealisti­c. Bank employees were berated for not making bloated sales quotas, which ultimately resulted in many employees gaming Wells Fargo’s sales system in order to meet these artificial sales goals. For ex

ample a number of Wells Fargo customers, notably the elderly, were signed up for online banking when they did not have

Internet access.

“Simply put, Wells Fargo traded its hardearned reputation for short-term profits, and harmed untold numbers of customers along the way,” said U.S. Attorney Nick Hanna for the Central District of California,

in a prepared statement.

The settlement with the Department of Justice covers Wells Fargo as a company, and the DOJ could still go after individual­s for violating bank laws. The Office of the Comptrolle­r of the Currency, one of the nation’s

bank regulators, fined several of Wells’ former top executives earlier this year for their role in the scandal.

Former chief executive John G. Stumpf was fined $17.5 million and agreed to a lifetime ban from the banking industry.

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 ?? JEENAH MOON — THE NEW YORK TIMES ?? Wells Fargo’s sales policies, pushed by top management, were aggressive and unrealisti­c.
JEENAH MOON — THE NEW YORK TIMES Wells Fargo’s sales policies, pushed by top management, were aggressive and unrealisti­c.

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