Wells Fargo wealth unit under federal scrutiny: Report
Another federal agency is on Wells Fargo's tail with questions, this time focused on its wealth management business.
The beleaguered bank was ordered by the Justice Department in late 2017 to conduct an independent investigation of the business after whistleblowers reported sales practice issues there, according to The Wall Street Journal.
The whistleblowers claimed that the bank's wealth management business was pushing particular products or services "with an eye toward earning more compensation rather than finding the best fit for the customer," The Wall Street Journal reported.
The bank tapped law firm Shearman & Sterling to conduct the investigation, according to The Wall Street Journal.
Shearman & Sterling, which has represented the bank's board ever since the sales-practice scandal broke in September 2016, did not respond to a phone call or email seeking comment.
In its 10-K filing, Wells Fargo disclosed that its board is assessing whether there have been inappropriate referrals or recommendations, including with respect to rollovers for 401(k) plan participants, within its Wealth and Investment Management business. The review is in its preliminary stages, it said.
The disclosures in the 10-K “reflects our continued commitment to transparency, even when all of the information or the final outcome of a matter may not be known just yet," Emily Acquisto, a spokeswoman for Wells Fargo, said. "We are making significant progress in our work to identify and fix any issues, make things right, and build a better, stronger company."
The Justice Department declined to comment, saying it does not generally confirm or deny the existence of investigations.
Ever since the bank reached a $185 million settlement with regulators in 2016, it has been besieged by formal and informal investigations launched by federal, state and local government agencies, the SEC, the Department of Labor, and state attorneys general and prosecutors' offices, as well as congressional committees. In addition, a number of lawsuits have been filed by non-governmental parties seeking damages related to their sales practices.
Most recently, the Fed took the unprecedented step of restricting Wells' growth until it improves its governance and controls. The Fed also ordered the bank to replace four board members by the end of the year.