Since reaching a $185 million settlement over aggressive sales practices in September, state and federal agencies have lined up to launch their own investigations of the San Francisco-based bank, which has its biggest employee hub in Charlotte.
Customers and employees around the country have also been filing their own lawsuits, adding to the fallout that has already cost former CEO John Stumpf his job.
Here’s a look at the various probes involving the bank:
Consumer Financial Protection Bureau and others
This is the one that started the firestorm: Wells Fargo agreed Sept. 8 to pay $185 million to settle allegations of “widespread illegal practices” in which employees secretly opened accounts to meet sales targets and receive bonuses.
Employees for the bank opened more than 2 million deposit and credit card accounts that may not have been authorized by consumers, regulators said, citing the bank’s own analysis.
Wells Fargo’s violations resulted in the Consumer Financial Protection Bureau imposing a $100 million fine, the regulator’s largest penalty ever. Wells will also pay a $35 million penalty to the U.S. Office of the Comptroller of the Currency, which regulates national banks, and another $50 million to the City and County of Los Angeles, which had filed suit over the practices.
U.S. Justice Department
The Observer has reported that federal prosecutors in Charlotte and San Francisco are heading up an investigation of the bank’s practices, and the bank has confirmed in a Sept. 28 securities filing that it’s the subject of a Justice Department probe.
The U.S. Attorney’s Offices for the Western District of North Carolina and the Northern District of California, which cover Wells’ two biggest corporate hubs, have issued subpoenas to the bank seeking communications and documents, a source told the Observer. The investigation is at an early stage and it’s not clear how long it will take and whether it would result in civil or criminal charges, the source said.
Other media reports have said the U.S. Attorney’s Office for the Southern District of New York has also begun an investigation into sales practices at the bank.
Wells is also the subject of investigations by state attorneys general, the bank has said in a securities filing.
California’s attorney general is conducting a criminal investigation into whether employees at the San Francisco-based bank stole customers’ identities in the sales practices scandal.
A search warrant and supporting affidavit released by the state Department of Justice show that agents sought evidence related to allegations that bank employees created up to 2 million bank and credit card accounts without customers’ approval in order to meet sales goals.
“These practices harmed consumers and our office is talking with other state AGs that share our concerns,” said Noelle Talley, a spokeswoman for North Carolina Attorney General Roy Cooper. “We’re in the process of gathering information from various sources so we can take a more detailed look.”
The House Financial Services Committee has requested documents from the bank and interviews with bank executives. Rep. Elijah Cummings, D-Md., the ranking member on the House Committee on Oversight and Government Reform, has also requested documents from the company.
In a letter to the bank on Oct. 20, Sen. Elizabeth Warren, D-Mass., questioned the bank’s decision to name insider Tim Sloan its new CEO and asked whether more compensation will be stripped away from its former chief executive. Rep. Maxine Waters, the top Democrat on the House Financial Services Committee, has said she will seek legislation to break up Wells Fargo.
Wells Fargo board of directors
On Sept. 27, the bank’s board said it was launching an investigation of sales practices that led to the bank’s $185 million settlement. A special committee of independent directors will lead the probe, working with the board’s human resources committee and law firm Shearman & Sterling LLP.
At that time, the board also said Stumpf would forfeit $41 million in stock awards, while former retail banking executive Carrie Tolstedt would lose $19 million of her stock awards. Both also gave up any bonuses for 2016.
The bank hasn’t said when the investigation will be finished.
On Oct. 12, Stumpf announced plans to retire immediately and was replaced by Sloan.
Securities and Exchange Commission
In a quarterly filing on Nov. 3, Wells disclosed that it’s also the subject of an SEC investigation. Warren, along with Sens. Jeff Merkley, D-Ore., and Bob Menendez, D-N.J., in a Sept. 28 letter called on the Securities and Exchange Commission to investigate whether Wells Fargo and senior officials violated laws “by misleading investors and firing whistleblowers while the bank oversaw the creation of millions of unauthorized, fraudulent accounts.”
State and local treasurers
Massachusetts, California, Illinois, Ohio and other state and local governments have pulled business from Wells Fargo over the scandal.
On. Sept. 26, U.S. Labor Secretary Thomas Perez said his office will conduct a “top-to-bottom” review of cases, complaints or violations concerning Wells Fargo over the last several years.
That announcement came after Sen. Warren and other lawmakers on Sept. 22 asked the department to investigate whether Wells violated federal law, including by failing to pay overtime to tellers and other bankers who worked late or on weekends to meet aggressive sales quotas.
Financial Industry Regulatory Authority
On Dec. 9, the Financial Industry Regulatory Authority asked former Wells Fargo bank employees whose securities registrations were terminated to get in touch with the regulator if they have concerns about how the bank had reported their firings.
In November, three Democratic senators raised questions about whether the bank retaliated against whistleblowers by filing defamatory reports with the regulator. Wells submitted over 200 of the reports to FINRA for employees who were fired for actions related to the accounts scandal.
According to a Wells securities filings, “a number of lawsuits have also been filed by non-governmental parties seeking damages or other remedies related to these sales practices.”
A group of Wells Fargo customers, including one in North Carolina, filed a lawsuit in Wake County asking the bank to turn over the identities of employees involved in a nationwide accounts scandal. Shareholders and former employees have also filed suits.
In addition to these investigations of the bank’s activities, other agencies and groups are also taking action against the bank or pushing for change:
Better Business Bureau
The Better Business Bureau stripped Wells Fargo’s accreditation after the bank’s settlement in September. The government action pushed Wells Fargo below the “B” rating required for businesses to maintain accreditation.
Consumer advocacy group Public Citizen has filed a shareholder proposal urging Wells Fargo to study the idea of breaking itself up. Saying Wells Fargo is “too big to manage,” Public Citizen said the bank’s board should retain independent experts to explore whether the company would be worth more in parts. Similar breakup proposals at Bank of America, Citigroup and JPMorgan Chase & Co. have generated little shareholder support in recent years.
CtW Investment Group, which advocates for labor union pension funds, has called for two new board directors at Wells Fargo. In a letter to Wells, CtW also calls on the bank to commission an outside review of its practices, including the risks that incentives carry for encouraging unethical behavior.
Shareholders would get their say on any potential proposals at the bank’s next annual shareholder meeting in May 2017.
The Associated Press and Bloomberg News contributed