WASHINGTON, D.C. — Wells Fargo has agreed to pay $3 billion to resolve the criminal and civil investigation into their sales practices involving the opening of millions of accounts without customers permission between 2012 and 2016.
This was said to have been done due to the company pressuring employees to meet unrealistic sales goals that led thousands of employees to provide millions of accounts or products to customers under false pretenses or without consent, often by creating false records or misusing customers’ identities, the Department of Justice announced today.
As part of the agreements with the United States Attorney’s Offices for the Central District of California and the Western District of North Carolina, the Commercial Litigation Branch of the Civil Division, and the Securities and Exchange Commission, Wells Fargo admitted that it collected millions of dollars in fees and interest to which the Company was not entitled, harmed the credit ratings of certain customers, and unlawfully misused customers’ sensitive personal information, including customers’ means of identification, a news release said.
“Our settlement with Wells Fargo, and the $3 billion monetary penalty imposed on the bank, go far beyond ‘the cost of doing business.’ They are appropriate given the staggering size, scope and duration of Wells Fargo’s illicit conduct, which spanned well over a decade,” U.S. Attorney Andrew Murray for the Western District of North Carolina said in a news release. “When a reputable institution like Wells Fargo caves to the pernicious forces of greed, and puts its own interests ahead of those of the customers it claims to serve, my office will not sit idle. Today’s announcement should serve as a stark reminder that no institution is too big, too powerful, or too well-known to be held accountable and face enforcement action for its wrongdoings.”
According to a news release, the criminal investigation is being resolved with a deferred prosecution agreement in which Wells Fargo will not be prosecuted during the three-year term of the agreement if it abides by certain conditions.
Wells Fargo has also entered into a civil settlement agreement under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) based on the creation of false bank records.
The $3 billion settlement payment will resolves matters and includes a $500 million civil penalty to be distributed by the SEC to investors.
In a 16-page statement of facts accompanying the deferred prosecution and civil settlement agreements outlines a course of conduct over 15 years at Well Fargo’s Community Bank consistently generating more than half of the company’s revenue.
In the statement it was outlined that the leaders knew about the unlawful acts at the establishments.
Wells Fargo admitted to despite the knowledge of the illegal sales practices, Community Bank senior leadership failed to take sufficient action to prevent and reduce the incidence of such practices.
Senior leadership of the Community Bank minimized the problems to Wells Fargo management and its board of directors, by casting the problem as driven by individual misconduct instead of the sales model itself, a news release said.
According to reports, Wells Fargo is one of the biggest employers in the Charlotte region with about 27,000 workers.