Wells Fargo – Warren Buftett’s largest investment – is once again making headlines for customer abuses. According to the Wall Street Journal, in the latest alleged criminal violation by the recidivist bank, whistleblowers within Wells Fargo Advisors flagged several issues related to products and services sold to customers “with an eye toward earning more compensation than finding the best fit for the customer.”
In response, the DOJ asked Wells Fargo to assess “whether there have been inappropriate referrals or recommendations, including with respect to rollovers for 401(k) plan participants, certain alternative investments, or referrals of brokerage customers to the company’s investment and fiduciary-services business,” revealed the bank in a Thursday regulatory filing.
The claims include Wells Fargo’s brokerage division, which is known as Wells Fargo Advisors , these people said. Wells Fargo’s former head of that division, Mary Mack, was tapped in July 2016 to clean up its retail banking business. More recently, she was promoted to also lead its consumer lending unit. –WSJ
The bank has hired Shearman & Sterling LLP to look into the allegations, according to people familiar with the matter. In April 2017, Shearman released a 113-page report on the bank’s sales and practices issues in the wake of widespread reports into questionable sales conduct affecting up to 3.5 million customers dating back to 2002.
Wells Fargo was hit with a $185 million regulatory penalty in September 2016. In 2015, they were ordered to pay $15 million to customers who were hit with certain sales fees, while last November they had to pay $3.4 million for unsuitable recommendations of volatility-linked exchange traded products.
Employees at the bank, which has 40 million retail customers, in some instances issued debit cards without customers’ knowledge and assigned personal identification numbers without telling them, according to the U.S. Consumer Financial Protection Bureau. They also transferred funds from authorized customer accounts to temporarily fund ones without customer permission, according to the allegations, sometimes resulting in fees for insufficient funds.
–WSJ
Most recently, the federal Reserve slapped wells Fargo with an unprecedented enforcement action, capping the bank’s growth. In an early February press release, the Fed said it would bar Wells from expanding its assets beyond their end-2017 level until it “sufficiently improves its governance and controls.”
The Fed also demanded that Wells replace three current board members by April and a fourth board member by the end of the year. The release says the board of directors must also improve its oversight practices. The bank will not be allowed to grow until the Fed approves a detail plan of action to be submitted by the bank.
Last year the bank improperly charged nearly 800,000 loan customers and up to 110,000 mortgage customers – which Wells Fargo is issuing refunds to in excess of $100 million.
Wells Fargo is the third worst performer among the KBW bank index following a steady intraday decline. And, according to Oppenheimer’s head of technical analysis, Ari Wald, there are no signs that the stock’s relative underperformance is abating.
via Zero Hedge http://ift.tt/2oA7oW4 Tyler Durden