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Wells Fargo Agrees to $3 Billion Penalty in the Wake of Fake-Accounts Scandal

Levin Law | 3.5.2020

Despite Settlement Ending Criminal and Civil Investigations, Company Continues to Face Legal Issues 

Banking giant, Wells Fargo agreed to a $3 billion settlement with the United States Department of Justice (“DOJ”) and the Securities and Exchange Commission (“SEC”). The payout ends a lengthy investigation by multiple agencies related to the creation of fake accounts and the misuse of personal information.  

The DOJ announced in a February 21, 2020 press release that the $3 billion settlement would resolve “their potential criminal and civil liability stemming from a practice between 2002 and 2016 of pressuring employees to meet unrealistic sales goals that led thousands of employees to provide millions of accounts or products to customers under false pretenses or without consent, often by creating false records or misusing customers’ identities.”

Deferred Prosecution Agreement

The government entered into a “deferred prosecution agreement” with Wells Fargo & Company. During a three-year term, Wells Fargo will not be prosecuted as long as they continue to cooperate with ongoing or future investigations related to the scandal or other misconduct. The $3 billion agreement includes a $500 million civil penalty by the SEC to be paid directly to affected investors.  

In addition to the fine, the company also agreed to a civil settlement under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), and a cease-and-desist proceeding instituted by the SEC for Section 10(b) and Rule 10b-5 violations.  Wells Fargo admitted to collecting millions of dollars in ill-gotten gains, harming credit rankings of their customers, and misusing the personal information of their customers.

Uncertain Future for Wells Fargo

While this settlement resolves at least certain criminal and civil investigations into the creation of fake accounts, it does not remove the possibility of future prosecution against Wells Fargo executives.  Additionally, other regulatory agencies continue their inquiries into how Wells Fargo allegedly mistreated employees and customers in other aways.

Wells Fargo continues to face scrutiny about their sales practices from a number of regulatory agencies. In the aftermath of the fake accounts scandal, Wells Fargo has faced a credibility crisis that appears to have affected its stock prices. According to the DOJ report, despite the highest levels of leadership, knowing that there was ongoing “unlawful and unethical activity,” they refused to alter their sales models that created the problem.  

Holding Financial Institutions Accountable

When large financial institutions in the world fail to protect their customers, they must be held accountable. Attorney Brian Levin has recovered millions for victims of financial misconduct. Contact Levin Law today at (305) 402-9050 or for a free case consultation. 

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