Following an extensive investigation by regulators on its questionable sales practices, US bank Well Fargo has reportedly agreed to pay $3 billion as settlement. The government investigation into the company's operations has managed to uncover a number of unscrupulous practices, which included the opening of millions of fake accounts.
Prior to the settlement, Wells Fargo had admitted that it had unlawfully collected millions of dollars in fees from its customers. The bank also admitted to misusing customer information and unknowingly harming its customers' credit ratings.
The investigation on Wells Fargo's practices began more than four years ago following the eruption of the scandal that forced it to remove two of its chief executive officers. The bank was also forced to pay hefty fines in the aftermath of the scandal. In 2018, the US Federal Reserve announced that will be limiting the growth of the bank pending further reviews and investigations.
Last month, former Wells Fargo executive, John Stumpf, was slapped with a $17.5 million fine. The executive was charged with being negligent and failing to stop misconduct within the company.
Wells Fargo's current CEO, Charlie Scharf, mentioned in a statement that the settlement with the government is a big step forward for the company as it will finally bring a close to a dark chapter. Scharf, who took reins of the company in October of last year, added that there is still a lot of work to be done to restore the company's reputation and to regain the trust that was lost.
The executive explained that the conduct that led to the settlement and the culture that allowed it to happen was "reprehensible" and is not in line with Wells Fargo's values.
In 2002, the bank's aggressive strategy that forced its employees to meet unrealistic sales goals resulted in an environment that was ripe for misconduct. Prosecutors found that some employees had created fake accounts with the intention of hitting their sales goals. Other illicit activities that were uncovered included the shifting of money between accounts without customer permission and the forceful selling of services. Investigators also revealed that top managers were aware of the illicit practices and had allowed them to continue.
US Attorney Nick Hanna mentioned in a statement that Wells Fargo's case illustrates a complete failure of leadership within the company, resulting from the bank's desire to earn quick short-term profits. Hanna added that he hopes the hefty penalty will ensure that the same mistakes will not be repeated.
