The powerful Financial Services Committee of the US House of Representatives announced Friday they will investigate allegations that Wells Fargo fraudulently opened millions of unauthorized customer accounts.
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The Wall Street Journal, citing familiar sources, said the investigation was conducted by the several USA attorney offices including the Southern District of NY and the Northern District of California.
Prosecutors have issued a subpoena to the bank for documents and materials, the people added.
September 14, 2016 (EIRNS)-Bloomberg News reported today that Federal prosecutors have issued subpoenas and begun an investigation of Wells Fargo Bank for having opened literally millions of fraudulent accounts and credit cards for unknowing customers, who then suffered fines and late fees.
Wells Fargo was selling customers an average of nearly six banking products, Forbes’s Halah Touryalai wrote in 2012, saying the company “does it better than anyone”.
While neither admitting nor denying the wrongdoing laid out in a Consumer Financial Protection Bureau consent order, the bank agreed to pay the fines and full restitution.
While the settlement barely makes a dent in the $23 billion of profit the bank earned past year, the scandal’s aftermath has caused a 7.5 per cent drop in Wells’ stock compared with a roughly 2.4 per cent decline for the Dow Jones US Banks Index.
Wells Fargo is grappling with further fallout.
A 2013 Los Angeles Times investigation revealed some of the alleged abusive practices reported by Wells Fargo employees, which included threatening to fire team members who didn’t meet quotas for opening accounts or who failed to sell customers overdraft protection. The bank also said it discovered the problem itself and has fired 5,300 workers for improper sales practices since 2011. A spokesman for the U.S. Attorney for the Northern District of California wasn’t immediately available to comment.
Abraham Simmons, a spokesman for the prosecutor’s office in San Francisco declined to comment on the probe, while James Margolin, a spokesman for US Attorney Preet Bharara in NY, didn’t immediately respond to a call seeking comment.
The accounts, opened without the knowledge of customers, resulted in fees as high as $50 apiece. They simply wouldn’t honor the bank’s customer-first culture, he said.
Despite the harsh words for the rank-and-file employees who were let go, the bank is honoring a $125 million retirement package for Carrie Tolstedt, who retired in July from her role as senior executive vice president of community banking.
To build a case against a company executive, prosecutors would have to show “they knew there was a plan to create false accounts to drive up sales”, said Brandon L. Garrett, a professor at the University of Virginia School of Law.
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Wells Fargo, the biggest USA home lender, under Stumpf’s command, stayed away from derivatives and focused on Main Street mortgages and checking accounts.
