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Wells Fargo agrees to pay US government $3 billion after fake account scandal
Wells Fargo agrees to pay US government $3 billion after fake account scandal

Wells Fargo has entered into a $3 billion agreement with the United States Department of Justice (DOJ) and the United States Securities and Exchange Comission (SEC) in an investigation over fraudulent sales practices. In return, the DOJ and SEC have agreed to drop criminal charges and resolve a pending civil investigation.

The investigations uncovered millions of fraudulent accounts opened by Community Bank, a Wells Fargo business unit, from 2002 to 2016. Additionally, Community Bank allegedly practiced unethical and unlawful sales practices to sell accounts to its customers without regarding customer needs.

Charlie Scharf, the Wells Fargo CEO, criticized the company’s practices and admitted the company’s culpability in the scandal:

The conduct at the core of today’s settlements — and the past culture that gave rise to it — are reprehensible and wholly inconsistent with the values on which Wells Fargo was built. Our customers, shareholders and employees deserved more from the leadership of this Company. Over the past three years, we’ve made fundamental changes to our business model, compensation programs, leadership and governance. While today’s announcement is a significant step in bringing this chapter to a close, there’s still more work we must do to rebuild the trust we lost. We are committing all necessary resources to ensure that nothing like this happens again, while also driving Wells Fargo forward.

This scandal is not the only financial crimes investigation involving Wells Fargo in the past few years. Federal regulators fined Wells Fargo $1 billion in April of 2018 for unfair lending practices that violated the Consumer Financial Protection Act. Similarly, in August of 2018, the DOJ penalized Wells Fargo for misrepresenting the quality of loans used in residential mortgage-backed securities.

The DOJ and SEC settlement does not mark the end of this scandal. The House Financial Service Committee plans to hold hearings over Wells Fargo in March.