Banking

Wells Fargo May Find A Lot More Fake Accounts

Wells Fargo warned late last week that a deeper dive into its sales practices raises the possibility for a “significant increase in the identified number of potentially unauthorized accounts” — including, potentially, a further dip in Wells Fargo’s stocks.

Citing a 10-Q filing with the Securities and Exchange Commission (SEC), Seeking Alpha reported news that the bank said the increased fake accounts could result in legal costs that exceed the amount it had set aside.

“We do not expect any incremental customer remediation costs as a result of these efforts to have a significant financial impact on the company,” Wells Fargo added, according to the report.

Wells Fargo also said it’s adding three more years to the review period that covered May of 2011 to the middle of 2015. The expansion was so that the consent order, which calls for the period to be from January of 2011 to September of 2016, would be covered. The report noted the bank is also looking at accounts from 2009 to 2010.

Last year, Wells Fargo was the subject of a huge scandal in which employees had opened a slew of fake accounts in the retail banking units. That resulted in a record fine, the ousting of key executives — including the CEO — and an overhaul of the corporate culture at the company. The scandal has also hurt Wells Fargo’s stock price and reputation.

The latest revelation comes as the embattled bank is facing calls from lawmakers to oust board members after a new incident of fraud, in which customers complained Wells Fargo charged them for auto insurance they didn’t want or need. 

U.S. Senator Elizabeth Warren recently asked Federal Reserve Chair Janet Yellen to remove members of Wells Fargo’s board. In a letter obtained by Reuters, Warren said further improper, fraudulent actions by the bank showed there were “deep risk management problems.” The lawmaker called for all board members who served from 2011 to 2015 to be removed.

Warren isn’t the only who wants change in the wake of what could be a new scandal. Reuters also reported New York City Comptroller Scott Stringer requested the bank replace chairman Stephen Sanger, saying the board at the bank needed to be overhauled.

——————————–

Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The July 2019 AML/KYC Tracker provides an in-depth examination of current efforts to stop money laundering, fight fraud and improve customer identity authentication in the financial services space.

Click to comment

TRENDING RIGHT NOW

To Top