Sat, Sep 10, 2016 - Page 10 News List

Wells Fargo fined over US$185m for bogus accounts

AFP, WASHINGTON

Retail and commercial banking giant Wells Fargo & Co will pay more than US$185 million in fines after US regulators accused the bank of secretly opening accounts without customers’ knowledge, officials said on Thursday.

The US’ Consumer Financial Protection Bureau (CFPB) said employees at Wells Fargo, the world’s largest bank by market value, had illegally boosted sales figures by opening unauthorized deposit and credit accounts and then covertly funding them with customers’ money, sometimes creating phony e-mail addresses to enroll them.

Wells Fargo found that employees had opened more than 1.5 million bogus deposit accounts alone from 2011 to last year, resulting in millions of dollars in customer fees while helping bank employees meet sales targets and receive bonuses.

Wells Fargo will pay US$100 million to the CFPB, the largest fine to date imposed by the bureau, which was created in the wake of the 2008 financial crisis.

The San Francisco-based bank will also pay US$50 million to the City of Los Angeles, which had filed suit last year, accusing the bank of pressuring employees into fraudulent behavior, such as opening fictitious accounts.

The bank will also pay a US$35 million fine to the US Department of the Treasury in addition to US$5 million to compensate all customers concerned.

“Today’s action should serve notice to the entire industry that financial incentive programs, if not monitored carefully, carry serious risks that can have serious legal consequences,” CFPB director Richard Cordray said in a statement.

Wells Fargo said in a statement that it regretted and took responsibility for the unauthorized accounts.

“”Wells Fargo reached these agreements consistent with our commitment to customers and in the interest of putting this matter behind us,” the company said.

A bank spokesperson said it had fired 5,300 employees tied the illegal conduct.

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