Wells Fargo disclosed in a regulatory filing Monday the Department of Justice (DOJ) has opened an investigation into the bank’s “hiring practices related to diversity.”
In a quarterly filing with the Securities and Exchange Commission, the bank said government agencies, including the DOJ, have “undertaken formal or informal inquiries or investigations” regarding its hiring practices. Wells Fargo further acknowledged a securities fraud class-action lawsuit it faces alleging the company and some executive officers made “false or misleading statements” about hiring practices related to diversity.
According to the class-action complaint filed in June in U.S. District Court for the Northern District of California, Wells Fargo in 2020 expanded its diverse slate hiring policy, which required “at least 50 percent of interview candidates must represent a historically underrepresented group” for most roles in the United States with compensation greater than $100,000 per year.
But the policy was a sham, according to a report from the New York Times published in May. The report cited discussions with current and former Wells Fargo employees, including Joe Bruno, a former executive in the bank’s wealth management division, who alleged diverse candidates would be interviewed for jobs that had “already been promised to someone else.”
Bruno would later be fired for “complain[ing] to his bosses about the practice,” according to the report.
In June, Wells Fargo suspended the policy, according to a Reuters report citing an internal memo, just before federal prosecutors opened a probe into the company’s hiring practices, according to multiple reports.
The class-action complaint alleges Wells Fargo and certain executive leaders made “materially false and misleading” statements regarding its hiring policies and “failed to disclose material adverse facts about the company’s business, operations, and compliance policies.”
Specifically, the complaint alleges Wells Fargo and its senior executives:
- Misrepresented their commitment to diversity in the workplace;
- Conducted fake job interviews to meet diverse search requirements;
- Subjected the bank to an increased risk of regulatory and/or governmental scrutiny and enforcement action, including criminal charges; and
- Negatively impacted the bank’s reputation.
Wells Fargo has since revived its diverse slate hiring policy, according to an internal memo reported on Monday by the New York Times, which cited one problem executives found was the policy was “overly prescriptive.”