On Friday, February 21st, Reuters reported that that Wells Fargo, one of the nation’s largest lenders, admitted to wrongdoing and has agreed to pay $3 billion dollars as part of a settlement stemming from investigations into fake accounts and pressure on employees. The investigation which began over three years ago involved probes, both civil and criminal.
Specifically, Wells Fargo agreed that, during the 14-year period between 2002 to 2016, it had pressured its employees to meet impossible sales goals; thereby causing them to pressure customers and offer falsified products and accounts. Additionally, findings showed that employees misused customer information, made up reports, and even falsified consent.
Wells Fargo’s reputation has suffered tremendously from the “Fake-Accounts Scandal”. In trying to restore trust and credibility after the scandal, Charles Scharf, top executive of Wells Fargo and Co. since last September, called the behavior “reprehensible” and committed to making sure nothing like this ever happens again.
As part of the agreement, penalties will be paid to the United States Department of Justices and the Securities and Exchange Commission (SEC), with $500 million going to the latter to be divided among investors. The agreement also allows for a three-year deferment for prosecutions while other Justice Department investigations related to Wells Fargo move forward.
Public Citizen, a public watchdog group, said the deal is not enough and advocates for charges being brought against individuals of the company since top management was aware of the fraudulent activities as far back as 2002. Democratic presidential candidate, Elizabeth Warren, has tweeted the settlement was a start, but not enough. She expressed her support for bringing charges against top executives if justified by the evidence Therefore, there is still the possibility that individuals within the company could face criminal or civil charges. The matter is not closed.
Since 2016 when the scandal started, Wells Fargo had been out $4 billion in penalties and fines.The $3 billion settlement, reported by Reuters, ends liabilities pertaining to the Wells Fargo’s fake-accounts scandal, but there are still ongoing issues and investigations. In March 2020, the House Financial Services Committee will hold three meetings.
Wells Fargo is eager to leave the scandal behind and move forward. According to Reuters, it has taken several steps to fix issues and rebuild its credibility. Unfortunately, unresolved legal issues have taken a toll on its reputation and profitability and it continues to lag behind.