SAN FRANCISCO–Wells Fargo has agreed to pay yet another fine over its activities, in this case $37 million to settle a government lawsuit accusing the bank of defrauding hundreds of commercial customers.
According to the U.S. Justice Department lawsuit that was filed Monday, the bank allegedly overcharged 771 businesses on foreign exchange transactions from 2010 through 2017.
As MSNBC noted, the settlement is the latest regulatory matter resolved under Wells Fargo CEO Charles Scharf, who was hired in 2019 to clean up a litany of legal woes that began with a 2016 fake accounts scandal. Earlier this month, Wells Fargo was hit with a $250 million fine on the same day it announced the resolution of a Consumer Financial Protection Bureau consent order, the news outlet added.
Incentives Motivated Overcharges
According to the lawsuit, Wells Fargo told the commercial customers that they were being charged certain fixed rates, but then incentivized salespeople to "overcharge FX customers.”
The suit added that the bank then concealed the overcharges from customers and obtained "millions of dollars in FX revenue to which the bank was not entitled.”
Most of the settlement, $35.3 million, is going as restitution to the overcharged customers, the government said. A whistleblower who kicked off the case in 2016, Paul J. Kohn, is set to receive $1.6 million, the DoJ said.
Senator Wants Bank Broken Up
As CUToday.info reported here, Sen. Elizabeth Warren (D-MA) has sent a letter to Federal Reserve Chairman Jerome H. Powell requesting the Fed force Wells Fargo to break off its core banking activities, such as its retail checking and savings accounts and loans, from its other financial services.
Separating those offerings from its Wall Street-centric services, including investment funds and providing financial market sales and trading services, according to Warren’s letter, would ensure that Wells Fargo’s everyday customers did not continue to suffer.