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Wells Fargo Wealth Under Direct Scrutiny by the Feds: WSJ

March 19, 2018

The wealth-management division of Wells Fargo isn’t just undergoing an internal review of sales practices ordered by the U.S. Department of Justice, as recently reported by the Wall Street Journal. It’s also under direct investigation by the Justice Department and the SEC, the same newspaper tells us, citing “people familiar with the matter.”

This week, the Journal writes, FBI agents have been interviewing Wells Fargo wealth management employees in Phoenix.

According to the newspaper, “Arizona was one epicenter of Wells Fargo’s retail-banking sales practices problems” which have been under investigation by “several U.S. Attorney’s offices as well as a bevy of federal and state regulators.”

At issue in the retail-bank scandal: some 3.5 million accounts opened by bank employees — seemingly motivated to meet sales goals — without the actual account owners' knowledge or permission.

Though Wells Fargo and the SEC declined to comment on the matter, the Journal’s unnamed sources say the investigation of Wells Fargo’s wealth-management business is distinct from the bank’s own investigation. The internal probe — again, ordered by the Justice Department — is meant to uncover whether there were “inappropriate referrals or recommendations, including with respect to rollovers for 401(k) plan participants, certain alternative investments, or referrals of brokerage customers to the company’s investment and fiduciary services business,” according to a recent Wells Fargo filing with the SEC cited by the Journal.

Having “found instances of incorrect fees applied to certain assets and accounts that resulted in overcharging customers,” San Francisco-based Wells Fargo is also taking a squint at “fee calculations within certain fiduciary and custody accounts” the Journal says in its summation of the bank’s SEC filing.

In the separate FBI and SEC investigations into Wells Fargo’s wealth-management unit that the Journal’s sources have identified, agents have already “found instances of incorrect fees applied to certain assets and accounts that resulted in overcharging customers” in “certain fiduciary and custody accounts,” according to the newspaper.

By Thomas Coyle
  • To read the Wall Street Journal article cited in this story, click here if you have a paid subscription.