Wells Fargo Pays $3B In Fake Account Scandal

Wells Fargo

Wells Fargo agreed to pay $3 billion as a settlement with regulators over a scandal involving the creation of fake accounts, according to a report by The Wall Street Journal.

The bank is finalizing settlements with both the Justice Department and the Securities and Exchange Commission (SEC).

The settlement gives the Justice Department the option to pursue future criminal charges in the case and also requires the bank to cooperate with authorities. 

Wells Fargo’s new CEO Charles Scharf said he wanted to get the issue resolved, as the bank recently revealed the investigations by both the SEC and the Justice Department.

Former CEO Timothy Sloan has also been interviewed as part of the federal investigations, which began in 2016 following the bank’s $185 million settlement with the Consumer Financial Protection Bureau, Office of the Comptroller of the Currency and the LA City Attorney.

That earlier settlement came after regulators found out about potentially millions of fake accounts created amid an aggressive sales environment. After that, new investigations were started.

Scharf has been actively trying to move forward from the scandal. He recently said he was redoing the company’s reporting lines, and splitting the bank’s three divisions into five. The wholesale bank is going to be split into a commercial bank and an investment bank.

The consumer bank is going to be split in half as well; with one half focusing on small business and branches and the other half focused on consumer lending. 

Scharf hopes that by separating the units he’ll be able to move the bank forward, as well as create more oversight and allow for department heads to report to him directly.

The new CEO said he had faith that the company’s focus on risk and control was going to lead the bank into a new era of accountability in the future.