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Attorney General of New York State, Barbara Underwood, accused Wells Fargo of making "fraudulent" returns to shareholders for "many years" about his business model and his tactics of notorious sales.
Wells Fargo (WFC) has agreed to pay a $ 65 million fine, but the scandal bank has neither admitted nor denied committing a wrongdoing.
"The misconduct at Wells Fargo was prevalent throughout the bank and at all levels of management, affecting both misled clients and investors," Underwood said in a statement.
For years, Wells Fargo has touted its ability to sell to its customers several products, an industry practice called "cross selling". The bank has consistently highlighted the success of its sales in its earnings reports to increase revenue and retain customers.
But Underwood's office criticized Wells Fargo for failing to reveal to investors that his cross-selling prowess was "based on misconduct in sales practices".
The bank admitted that unrealistic sales targets had led employees to open up to 3.5 million fake bank accounts and credit cards without their clients' knowledge. Wells Fargo workers faced constant pressure to achieve their sales goals and were rewarded with bonuses and promotions.
Wells Fargo shareholders lost money when the bank's shares underperformed as a result of the false accounts scandal. A wave of legal problems tarnished Wells Fargo's profits and tarnished its reputation.
The settlement in New York indicated that Wells Fargo had failed to alert investors to the "systemic problems" posed by its marketing tactics. This is despite the fact that former Wells Fargo chairman and CEO, John Stumpf, told Congress that he had realized a widespread fraud of the share of employees in 2013. And the Wells Fargo Board of Directors has received reports of increased allegations as of 2011.
New York officials pointed to an email in June 2011 in which a member of the bank's incentive compensation team has acknowledged the misconduct. "I asked the bankers … why people cheat … it's because their manager tells them that they will be fired if they do not respect their minimum," he said. declared e-mail.
New York officials continue to investigate
In a statement, Wells Fargo emphasized that she did not accept any responsibility. "We believe that it is in the interest of all our stakeholders, including customers, to settle this matter," said the bank, adding that she had already set aside funds to cover the costs of the settlement.
Wells Fargo pointed out that the claims in the regulation related to product sales targets that were eliminated in 2016. "We remain focused on turning Wells Fargo into a better company for our customers and other stakeholders", said the company.
But Wells Fargo did not stand out with New York regulators. The Underwood office stated that it was investigating Wells Fargo's "illegal business practices" including registering clients for services without their knowledge or consent. Wells Fargo said it charged thousands of customers for auto insurance that they did not need. The bank also reimbursed customers charged for pet insurance and other products that they did not understand well.
Underwood is committed to continuing to protect working families and investors from financial fraud by enforcing the Martin Act Act, a state securities law that gives authorities broad powers regarding of repression.
In May, Wells Fargo agreed to disburse $ 480 million to settle a securities fraud lawsuit brought by investors who alleged that the bank had provided anomalies and omissions in its information on sales practices.
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