[Charlotte Bus Journal] Wells Fargo & Co. (NYSE: WFC) agreed to pay a $65 million settlement on Monday for fraudulent statements to investors.The penalty stems from Wells Fargo's cross-selling business, in which employees sell new products or services to existing customers. New York Attorney General Barbara Underwood says the bank failed to disclose to investors that its strong cross-selling efforts were driven by fraudulent sales practices, such as opening millions of fake deposit and credit card accounts without customers' knowledge.
Employees who met sales requirements were eligible for promotions and bonuses, while those who did not faced potential termination.
"The misconduct at Wells Fargo was widespread across the bank and at every level of management ‐ impacting both customers and investors who were misled," Underwood says. "State securities laws are vital to protecting the hard-earned savings of working families and Main Street investors from financial fraud, and my office will continue to do what’s necessary to protect the public and the integrity of our markets."
Underwood notes Wells Fargo became aware of the fraudulent practices as early as 2011, but did not disclose the information to investors. When news of those practices broke publicly, New York investors lost millions of dollars, she says.
The bank issued the following response: "Wells Fargo did not admit liability, and we believe that putting this matter behind us is in the best interest of all of our stakeholders, including customers. The settlement costs have been previously accrued. We are making strong progress in our work to rebuild trust, and this represents another step forward. Over the past two years, we have made fundamental changes to retail sales practices, and the claims in this settlement relate to past product sales goals that were eliminated in 2016."
The New York Attorney General’s office says this settlement is separate from an ongoing investigation into the fraudulent accounts and services added without customers' consent.