The hits just keep on coming for Wells Fargo. New allegations claim that employees may have improperly altered customer forms.
Earlier this month, the banking giant, launched a new marketing campaign, “Re-Established,” to “emphasize the company’s commitment to re-establish trust with stakeholders and to demonstrate how Wells Fargo is transforming as it emerges from a challenging period in its history.”
“This campaign marks a turning point by expressing how we are fundamentally a different company today, and that it feels like a new day at Wells Fargo,” said Tim Sloan, Wells Fargo’s chief executive officer and president. “While we have made solid progress, we recognize there is still work to be done.”
For more than a year-and-a-half, Wells Fargo has been under near-constant attack for the discovery that its sales team opened 3.5 million unauthorized customer accounts and credit cards. The bank settled with the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau for $1 billion. In a separate scandal, as many as 800,000 customers were charged for car insurance that they did not need; some had their vehicles wrongfully repossessed as a result.
Now comes word, via reporting in the Wall Street Journal, that Wells Fargo employees allegedly altered information on business customers’ documents. According to the report, employees in a Wells Fargo unit that handles business banking “improperly altered [and added] information on documents related to corporate customers.”
“The behavior took place in 2017 and early 2018 as Wells Fargo was trying to meet a deadline to comply with a regulatory consent order related to the bank’s anti-money-laundering controls,” the story reads, adding that Wells Fargo has disclosed the matter to the OCC, its primary banking regulator.
The bank’s response: “This matter involves documents used for internal purposes. No customers were negatively impacted, no data left the company, and no products or services were sold as a result.”
It is not yet clear how or why data was added or altered.
More troubling news for the bank came on May 7, the same day Wells Fargo launched the new advertising campaign. It announced that it had reached an agreement in principle to resolve a consolidated securities fraud class action in the U.S. District Court for the Northern District of California alleging “certain misstatements and omissions in the company’s disclosures related to sales practices matters.” The lawsuit sought damages for investors who bought Wells Fargo stocks between February 2014 and September 2016, shares that were affected by the unauthorized accounts scandal.
As disclosed in its first quarter Form 10-Q filed on May 4, the company will pay $480 million under the agreement, which is subject to confirmation by plaintiffs and final approval by the court.
“Wells Fargo denies the claims and allegations in the action and entered into the agreement in principle to avoid the cost and disruption of further litigation,” Wells Fargo said in a statement.
“We are making strong progress in our work to rebuild trust, and this represents another step forward,” Sloan said.
Amid all this, regulators and legislators still keep a watchful eye on the bank.
Last week, Federal Reserve Board Chair Jerome Powell sent a letter to Sen. Elizabeth Warren (D-Mass.) agreeing to her demand for a public vote by the Federal Reserve Board of Governors on Wells Fargo’s remediation plans and whether to lift post-scandal growth restrictions.
A February consent order between the Fed and Wells Fargo prohibits the bank from growing any larger until it makes certain improvements. Under the order’s terms, Wells Fargo must submit a plan to make its board of directors more effective and a plan to improve its risk management policies to the Board.
During a March 1 Senate Banking Committee hearing, Powell said he intended to delegate the Board’s decision to accept the bank’s remediation plans to staff. Warren subsequently pressed him to “consider requiring a vote of the Fed before” approving a plan. The Fed chairman subsequently agreed that he would do so.
Powell also assented to Warren’s request to consider releasing as much of the third-party review on how the bank is implementing reforms as possible. These reports typically are not made public as they contain confidential supervisory information from regulators and confidential financial information of the institution under review.
When the report is ready, “we will review that report to determine whether and to what extent the report can be publicly disclosed without impairing protected interests,” Powell wrote.