Wells Fargo Fined $35M Over Claims of Overcharging Customers
Wells Fargo agrees to a multimillion-dollar settlement following claims that the bank imposed excessive investment advice fees on its customers.
The U.S. Securities and Exchange Commission (SEC) recently shed light on Wells Fargo's alleged overbilling misconduct. The regulator highlights that the bank, having acquired other firms, levied extra advisory fees totaling around $26.8 million from over 10,900 of its customers. This discrepancy arose when Wells Fargo’s financial advisers and those from the newly integrated firms reduced the advisory fees for a segment of the bank's clients. The revised rates were documented when setting up the customers' accounts; however, an oversight in Wells Fargo's billing systems prevented these adjustments from being reflected.
Furthermore, the SEC points out that Wells Fargo did not put in place adequate checks or guidelines to avoid such overbilling. The oversight specifically impacted those who established their accounts prior to 2014 and continued till December 2022. Gurbir S. Grewal, who leads the SEC’s Enforcement Division, emphasized the importance of keeping customer interests at the forefront, especially during expansion through acquisitions. He stated, "Investment advisers are obligated to uphold their commitments to all clients, encompassing those from acquired entities.”
In the wake of these allegations, Wells Fargo has conceded to a settlement, agreeing to pay a $35 million fine. The bank, however, refrains from either accepting or refuting the SEC's claims. Beyond the penalty, Wells Fargo has compensated its customers by returning $40 million, which also covers the interest, for the unwarranted advisory fees they were charged.
Aug 28, 2023