The Securities and Exchange Commission today charged California-based Wells Fargo & Co. for misleading investors about the success of its business strategy at a time when it was opening fake accounts for unknowing customers and selling unnecessary products that went unused. The SEC’s order finds that Wells Fargo violated the anti-fraud provisions of the Securities Exchange Act of 1934.
Wells Fargo has agreed to pay $500 million to settle the charges, which will be returned to investors. The $500 million payment is part of a combined $3 billion settlement with the SEC and the Department of Justice.
According to the SEC’s order, between 2012 and 2016, Wells Fargo publicly hyped to investors the success of its Community Bank’s “cross-sell” strategy – selling additional financial products to its existing customers – which it characterized as a key component of its financial success.
The order finds that Wells Fargo sought to induce investors’ continued reliance on the cross-sell metric even though it was inflated by accounts and services that were unused, unneeded, or unauthorized.
According to the order, from 2002 to 2016, Wells Fargo opened millions of accounts of financial products that were unauthorized or fraudulent. Wells Fargo’s Community Bank also pressured customers to buy products they did not need and would not use. The order finds that these accounts were opened through sales practices inconsistent with Wells Fargo’s investor disclosures regarding its purported needs-based selling model.
“Wells Fargo buy orlistat repeatedly misled investors, including through a misleading performance metric, about what it claimed to be the cornerstone of its Community Bank business model and its ability to grow revenue and earnings,” said Stephanie Avakian, Co-Director of the SEC’s Division of Enforcement.
“This settlement holds Wells Fargo responsible for its fraud and furthers the SEC’s goal of returning funds to harmed investors,” said Avakian.
Wells Fargo has agreed to cease and desist from committing or causing any future violations of these provisions and to pay a civil penalty of $500 million. The SEC will distribute this money to harmed investors.
The SEC’s investigation was conducted by Victor Hong, John Roscigno, Jason H. Lee, and Erin E. Wilk, with assistance from Suzy LaMarca and John Han, under the supervision of Monique C. Winkler of the San Francisco Regional Office. Polly Hayes, Dustin Ruta, and Karen Klotz of the Philadelphia Regional Office also assisted the investigation. The SEC’s investigation is continuing.
The SEC ”appreciates the assistance of the U.S. Attorney’s Offices for the Central District of California and the Western District of North Carolina, the Civil Division of the Department of Justice, the Federal Bureau of Investigation, the Federal Deposit Insurance Corporation – Office of Inspector General, the Federal Housing Finance Agency – Office of Inspector General, the Office of Inspector General for the Board of Governors of the Federal Reserve System, and the U.S. Postal Inspection Service.”
About Ken Zino
Ken Zino, editor and publisher of AutoInformed, is a versatile auto industry participant with global experience spanning decades in print and broadcast journalism, as well as social media. He has automobile testing, marketing, public relations and communications experience. He is past president of The International Motor Press Assn, the Detroit Press Club, founding member and first President of the Automotive Press Assn. He is a member of APA, IMPA and the Midwest Automotive Press Assn.
He also brings an historical perspective while citing their contemporary relevance of the work of legendary auto writers such as Ken Purdy, Jim Dunne or Jerry Flint, or writers such as Red Smith, Mark Twain, Thomas Jefferson – all to bring perspective to a chaotic automotive universe.
Above all, decades after he first drove a car, Zino still revels in the sound of the exhaust as the throttle is blipped during a downshift and the driver’s rush that occurs when the entry, apex and exit points of a turn are smoothly and swiftly crossed. It’s the beginning of a perfect lap.
AutoInformed has an editorial philosophy that loves transportation machines of all kinds while promoting critical thinking about the future use of cars and trucks.
Zino builds AutoInformed from his background in automotive journalism starting at Hearst Publishing in New York City on Motor and MotorTech Magazines and car testing where he reviewed hundreds of vehicles in his decade-long stint as the Detroit Bureau Chief of Road & Track magazine. Zino has also worked in Europe, and Asia – now the largest automotive market in the world with China at its center.
Wells Fargo to Pay $500 Million for Misleading Investors
The Securities and Exchange Commission today charged California-based Wells Fargo & Co. for misleading investors about the success of its business strategy at a time when it was opening fake accounts for unknowing customers and selling unnecessary products that went unused. The SEC’s order finds that Wells Fargo violated the anti-fraud provisions of the Securities Exchange Act of 1934.
Wells Fargo has agreed to pay $500 million to settle the charges, which will be returned to investors. The $500 million payment is part of a combined $3 billion settlement with the SEC and the Department of Justice.
According to the SEC’s order, between 2012 and 2016, Wells Fargo publicly hyped to investors the success of its Community Bank’s “cross-sell” strategy – selling additional financial products to its existing customers – which it characterized as a key component of its financial success.
The order finds that Wells Fargo sought to induce investors’ continued reliance on the cross-sell metric even though it was inflated by accounts and services that were unused, unneeded, or unauthorized.
According to the order, from 2002 to 2016, Wells Fargo opened millions of accounts of financial products that were unauthorized or fraudulent. Wells Fargo’s Community Bank also pressured customers to buy products they did not need and would not use. The order finds that these accounts were opened through sales practices inconsistent with Wells Fargo’s investor disclosures regarding its purported needs-based selling model.
“Wells Fargo buy orlistat repeatedly misled investors, including through a misleading performance metric, about what it claimed to be the cornerstone of its Community Bank business model and its ability to grow revenue and earnings,” said Stephanie Avakian, Co-Director of the SEC’s Division of Enforcement.
“This settlement holds Wells Fargo responsible for its fraud and furthers the SEC’s goal of returning funds to harmed investors,” said Avakian.
Wells Fargo has agreed to cease and desist from committing or causing any future violations of these provisions and to pay a civil penalty of $500 million. The SEC will distribute this money to harmed investors.
The SEC’s investigation was conducted by Victor Hong, John Roscigno, Jason H. Lee, and Erin E. Wilk, with assistance from Suzy LaMarca and John Han, under the supervision of Monique C. Winkler of the San Francisco Regional Office. Polly Hayes, Dustin Ruta, and Karen Klotz of the Philadelphia Regional Office also assisted the investigation. The SEC’s investigation is continuing.
The SEC ”appreciates the assistance of the U.S. Attorney’s Offices for the Central District of California and the Western District of North Carolina, the Civil Division of the Department of Justice, the Federal Bureau of Investigation, the Federal Deposit Insurance Corporation – Office of Inspector General, the Federal Housing Finance Agency – Office of Inspector General, the Office of Inspector General for the Board of Governors of the Federal Reserve System, and the U.S. Postal Inspection Service.”
About Ken Zino
Ken Zino, editor and publisher of AutoInformed, is a versatile auto industry participant with global experience spanning decades in print and broadcast journalism, as well as social media. He has automobile testing, marketing, public relations and communications experience. He is past president of The International Motor Press Assn, the Detroit Press Club, founding member and first President of the Automotive Press Assn. He is a member of APA, IMPA and the Midwest Automotive Press Assn. He also brings an historical perspective while citing their contemporary relevance of the work of legendary auto writers such as Ken Purdy, Jim Dunne or Jerry Flint, or writers such as Red Smith, Mark Twain, Thomas Jefferson – all to bring perspective to a chaotic automotive universe. Above all, decades after he first drove a car, Zino still revels in the sound of the exhaust as the throttle is blipped during a downshift and the driver’s rush that occurs when the entry, apex and exit points of a turn are smoothly and swiftly crossed. It’s the beginning of a perfect lap. AutoInformed has an editorial philosophy that loves transportation machines of all kinds while promoting critical thinking about the future use of cars and trucks. Zino builds AutoInformed from his background in automotive journalism starting at Hearst Publishing in New York City on Motor and MotorTech Magazines and car testing where he reviewed hundreds of vehicles in his decade-long stint as the Detroit Bureau Chief of Road & Track magazine. Zino has also worked in Europe, and Asia – now the largest automotive market in the world with China at its center.