US authorities confirmed on Friday that they had imposed a big fine of 3 billion dollars (2.93 billion francs) on the Californian bank Wells fargo. The latter opened, for fourteen years, millions of fictitious accounts in the name of its customers but without their knowledge.
“Wells Fargo has admitted to having collected millions of dollars in commissions, costs and interest to which it was not entitled (…) and to have illegally misused personal and sensitive customer information, including their identifiers”, a explained the Department of Justice (DoJ) in a press release.
Wells Fargo Agrees to Pay $ 3 Billion to Resolve Criminal and Civil Investigations into Sales Practices Involving the Opening of Millions of Accounts without Customer Authorization https://t.co/UsWFZOZZNE
– Justice Department (@TheJusticeDept) February 21, 2020
Earlier, two sources familiar with the matter had told AFP that the ministry and the stock market policeman, the SEC, had reached an agreement with the firm and that an announcement was imminent. Of the $ 3 billion fine, 500 million (489.07 million francs) will go directly to affected customers. Wells Fargo, the fourth American bank by assets, could easily absorb the fine since the firm had set aside $ 3.9 billion (3.81 billion francs) as of June 30, 2019 to settle legal disputes.
The fictitious accounts scandal erupted in 2016 and has already resulted in the dismissal of two CEOs, the dismissal of more than 5,300 employees as well as multiple inquiries into the establishment’s business practices.
“Scourge”
The DoJ and the SEC blamed Wells Fargo employees for opening millions of accounts on behalf of clients and without their knowledge, from 2002 to 2016, to achieve sales targets. This commercial practice was internally dubbed “deception” (gaming), according to the authorities.
“It included using the identities of existing customers – without their consent – to open current and savings accounts, to apply for bank credit and debit cards on their behalf without informing them and debiting their accounts to charge fees related to these products, “describes the Department of Justice.
According to the DoJ, these “illegal” practices were known to the top of the company because two internal investigations, including one in 2004 referring to “an expanding scourge”, had sounded the alarm. But nothing had been done. “The following year, another internal investigator said the problem was ‘out of control’,” the ministry said.
Over 7 billion penalties
John Stumpf, who was CEO from 2005 to October 2016, was banned from the banking industry for life in January by the Office of the Comptroller of the Currency (OCC), the leading regulator of the U.S. banking industry. outside the Central Bank. He was also fined $ 17.5 million (17.12 million francs) in the case.
The agreement with Wells Fargo is a DPA (“Deferred Prosecution Agreement”), which is a mechanism by which a company recognizes elements that are alleged against it and undertakes not to commit similar offenses for a certain period of time. In this case, the probationary period is three years. In exchange, the authorities renounce prosecuting her in criminal proceedings.
Wells Fargo has now paid a total of more than $ 7 billion (6.85 billion francs) in financial penalties related to its business practices since the break-up of the fictitious accounts affair, which has plummeted its results for three years now. (Ps / nxp)
Created: 22.02.2020, 12:15 am
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