Wells Fargo disclosed Thursday (Nov. 3) it is raising the amount of money it set aside for legal fees due to the fake account scandal and added the Securities and Exchange Commission to the growing list of regulators that are looking into its sales practices.
In a Securities and Exchange Commission filing covered by the media, Wells Fargo said the high end of the potential litigation losses reached close to $1.7 billion above the reserves it has to cover this. Wells Fargo had previously expected to be hit with $1 billion in litigation losses over reserves. The bank did note that it’s not clear if the investigations into its sales practices will ultimately have an adverse affect on its finances.
Wells Fargo also said in the filing that regulators, in addition to making Wells Fargo pay penalties, may make it admit it engaged in wrongdoing.
Meanwhile, The Wall Street Journal reported earlier in the week that the Securities and Exchange Commission was looking into the sales practices at the beleaguered bank. According to the WSJ report, which cited unnamed sources, the probe on the part of the SEC is in the initial stage. The SEC requested information from Wells Fargo in the past few weeks. The information relates to the bank’s fake account scandal.
In September, the Consumer Financial Protection Bureau announced Wells Fargo agreed to pay a $185 million fine and refund $5 million in fees that the bank wrongly charged customers. According to an investigation by the CFPB, Wells Fargo employees not only made fake deposit accounts but also submitted 565,443 unauthorized credit card account applications on behalf of unknowing customers. It’s estimated that 14,000 of those accounts accrued $403,145 in fees. Through its own independent investigation, the bank discovered a total of $2.6 million in unauthorized fees. The scandal has resulted in Wells Fargo CEO John Stumpf relinquishing his role at the bank.