Security & Fraud

Wells Fargo Probe Expands Into Wealth Management Unit

U.S. regulators’ investigations into Wells Fargo’s sales practices has expanded into the financial institution’s wealth management operations, according to news from The Wall Street Journal.

Reports Friday (March 16) said the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) are investigating Wells’ wealth management unit, unnamed sources told the WSJ. Some of those sources also said the Federal Bureau of Investigation is speaking with some employees in the wealth management unit.

Wells Fargo, the DOJ and the SEC all declined to comment.

News of the expanded investigation comes just weeks after reports surfaced that Wells was investigating its wealth management business as part of its own internal investigation into what’s now known as the “fake accounts scandal.” Reuters reported at the time that Wells’ board of directors was probing “possible customer abuse” related to alternative investments, retirement accounts and other customer investment vehicles.

Wells disclosed the investigation as part of a 10K filing with the SEC, reports said.

Federal regulators’ investigation into the financial institution began after it disclosed wrongdoing in 2016, revealing employees had been reportedly encouraged to open fake accounts without customers’ knowledge or consent.

The investigations have led to sanctions and internal restructuring, as well as an asset cap imposed by the Federal Reserve, as Wells moves to put the scandal behind it. But revelations of an expansion of federal probes suggest the scandal is far from over.

At an investor conference last month, Wells Chief Executive Tim Sloan assured business as usual. despite regulatory action.

“There’s a lot of different metrics that you look at, but they’re all pointing to a slow but steady recovery,” he said. “It’s never as fast as I would like, but it’s absolutely occurring.”

He added that the financial institution aims to revive its capital levels to about 10 percent over the next two or three years, according to reports.


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