The Securities and Exchange Commission on Friday, August 25, reported that Wells Fargo has for many years used the practice of illegally overcharging almost 11,000 investment advisory accounts in the amount of about $27 million.
The Securities and Exchange Commission on Friday, August 25, reported that Wells Fargo has for many years used the practice of illegally overcharging almost 11,000 investment advisory accounts in the amount of about $27 million.
The financial institution announced its readiness to pay a civil fine, the amount of which is $35 million, in order to resolve the situation related to accusations of the lender’s involvement in the commission of unjustified and unwarranted actions. At the same time, the bank did not deny or confirm the regulator’s claims about the illegality of its practice.
The SEC also announced that the financial institution will pay the account holders a total of about $40 million. The regulator clarified that this amount will include interest.
The SEC alleges that the overpayment of fees arose at a time when some financial advisers of the bank and firms that the lender subsequently acquired agreed to reduce the standard fee for providing services to certain clients. However, the regulator found that employees of Wells Fargo and the so-called predecessor companies that handle accounts, in some cases, did not introduce reduced rates of consulting fees into billing systems.
The authorities also stated that the financial institution did not use compliance systems, which are designed to ensure that accurate data is available in billing arrays of information. Another reason for the bank’s accusation was insufficiently effective control over compliance with measures to prevent overcharging for customers.
The SEC alleges that Wells Fargo overcharged some users who opened accounts prior to 2014 through the end of 2022.
For the bank, claims from the regulator are not something fundamentally new. In another proceeding, the SEC fined a lender $200 million for using personal messaging apps as part of a business discussion without keeping records. Also at the end of last year, federal regulators accused the financial institution of widespread mismanagement practices, saying that this problem caused damage to more than 16 million user accounts. As part of this trial, the bank was fined a record amount of $1.7 billion. Also, the amount of compensation to consumers for a number of illegal actions exceeded $2 billion.
Gurbir Grewal, director of the SEC’s Enforcement Division, says that today’s enforcement actions are evidence that companies should expand their business through acquisitions in order to eliminate the possibility of growth due to customer protection.
Wells Fargo Advisors is one of the largest brokerage firms in the United States. The company traces its history back to AG Edwards. In 2007, there was a merger with Wachovia in 2007. Wells Fargo acquired Wachovia during the Great Recession.
The representative of the bank, Caroline Szyperski, said that the brokerage firm, which is part of the ownership structure of the financial institution, conducted a thorough audit of the accounts and reimbursed the victims in full. She also stated that the process that caused this problem was fixed almost ten years ago.
As we have reported earlier, Deposits Disappear From Wells Fargo Bank Accounts.
