Report: Wells Fargo investigation broadens to wealth division
A federal investigation into Wells Fargo has broadened to include the bank's wealth-management division, according to a Wall Street Journal report Friday.
Wells Fargo is wrestling with the aftermath of a scandal in its retail banking unit in which, among other things, employees opened up millions of fake accounts without customer authorization.
The Justice Department is now investigating whether Wells Fargo made inappropriate recommendations or referrals, or failed to inform customers about potential conflicts of interest, the Journal reported, citing unnamed people familiar with the matter.
A bank spokesman declined to comment on the report Friday.
Meanwhile, Well Fargo (WFC) said earlier this week that CEO Tim Sloan received a $4.6 million raise, or a 35 percent pay hike, despite the bank continuing to face the fallout of its sales-practices scandal.
Last July, the bank said it would pay $80 million to customers who the bank signed up and charged for auto insurance that they did not want or need. Wells Fargo said that roughly 570,000 customers were affected and will be getting refunds.
.@WellsFargo is about to be sanctioned for running an auto insurance scam that cost Americans millions of dollars. I don’t think that sort of corporate management merits a raise for CEO Tim Sloan. https://t.co/0B3pTzgd98
— Elizabeth Warren (@SenWarren) March 15, 2018
The bank previously disclosed in a securities filing that it is conducting its own internal investigation into its wealth-management business, and is reviewing the fees it charged customers in those accounts, including potential overcharges. Both of those investigations are in the early stages, the bank said.
Earlier this year, the Federal Reserve put significant restrictions on the San Francisco bank citing "widespread consumer abuses." The bank is replacing four members of its board and its asset level has been frozen by the Fed until internal controls are improved.
Separate from the sales-practices and the reported wealth-management investigations, Wells Fargo is under investigation for potentially overcharging corporate customers in foreign-exchange transactions as well as an investigation into its auto-lending business for the auto insurance policy sales.