Wells Fargo To Pay $3B Settlement Over Fake Accounts Scandal
LOS ANGELES (CBSLA/AP) – Banking giant Wells Fargo will pay $3 billion to the federal government to settle criminal and civil investigations over the massive scandal in which employees created millions of fake accounts over a period of several years in order to meet lofty sales goals.
The settlement was announced in a news conference Friday in Los Angeles with officials from the U.S. Justice Department and the Securities and Exchange Commission.
Beginning around 2002 and running through 2016, Wells Fargo employees opened up to 2 million fake bank and credit card accounts without customers' consent or knowledge due to pressure from the company to meet certain sales thresholds.
The $3 billion payment includes a $500 million civil payment to the Securities and Exchange Commission, which will distribute those funds to investors who were impacted by Wells' behavior.
"From 2002 to 2016, gaming practices included forging customer signatures to open accounts without authorization, creating PINs to activate unauthorized debit cards, moving money from millions of customer accounts to unauthorized accounts in a practice known internally as 'simulated funding,' opening credit cards and bill pay products without authorization, altering customers' true contact information to prevent customers from learning of unauthorized accounts and prevent Wells Fargo employees from reaching customers to conduct customer satisfaction surveys, and encouraging customers to open accounts they neither wanted or needed," the Justice Department said in a news release.
Since the fake-accounts scandal came to light in 2016, Wells has already paid out billions in fines to state and federal regulators, reshuffled its board of directors and seen two CEOs and other top-level executives leave the company.
In September of 2016, Wells Fargo reached a $50 million settlement with the city of Los Angeles for the scandal.
Current Wells Fargo CEO Charlie Scharf, who started the job only a few months ago, has staked his early reputation on resolving all of the bank's legal questions. He has been blunt in saying that what the bank did under previous management was unacceptable.
"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," Scharf in a statement.
To read full details on the settlement, click here.
(© Copyright 2020 CBS Broadcasting Inc. All Rights Reserved. The Associated Press contributed to this report.)
