Federal prosecutors in San Francisco are investigating foreign-exchange trading at Wells Fargo following the departure of four bankers in the unit this month, the Wall Street Journal reported Friday.
Wells Fargo publicly acknowledged Friday that the departure of the bankers was related to a single customer transaction, but did not identify the corporate client involved in the matter. The Observer reported Tuesday that the matter involved a single customer who was aware of the matter, citing a source familiar with the situation.
The Journal, citing sources, said the issues in the foreign-exchange unit involved Ontario-based Restaurant Brands International Inc, the parent company of Burger King, Tim Hortons and Popeyes Louisiana Kitchen. Warren Buffett’s Berkshire Hathaway is a shareholder of RBI and Wells Fargo.
The San Francisco-based bank, which is already working to recover from a retail bank sales scandal, said the departure of the employees was not related to “issues involving market collusion, front running, or market manipulation.”
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The matter first surfaced last week when the Journal reported the bank had fired four bankers in its foreign-exchange unit amid an investigation by the company and regulators.
The investigation is the latest black eye for Wells Fargo, which is still trying to recover from a retail banking sales scandal that spurred regulatory penalties, congressional hearings and a CEO change. The latest probe takes place in a different part of the company: the corporate and investment bank that has a significant Charlotte presence.
In its statement Friday, a Wells Fargo spokeswoman said the bank took action after it learned of “an issue associated with a foreign exchange transaction” for a customer.
“The matter was reviewed, the client was promptly notified regarding the issue, and Wells Fargo leadership took steps to hold accountable the individuals who were involved,” the spokeswoman said. “The departure of these employees was not related to issues involving market collusion, front running, or market manipulation. Wells Fargo remains committed to our foreign exchange business, meeting our clients’ financial needs in an ethical way, and ensuring ongoing review of this and all business operations.”
Wells Fargo’s foreign-exchange business provides an array of services to multinational corporations, from international wire transfers to hedging contracts that allow companies to manage risk related to foreign currencies.
The four bankers who have left the company are Jed Guenther, Simon Fowles, Bob Gotelli and Michael Schaufler, Wells Fargo said last week. Guenther was based in Charlotte, while LinkedIn pages for Fowles and Gotelli indicate they worked in California. A page for Schaufler could not be found. The bankers have not responded to requests for comment.
Wells Fargo also said last week that the former head of its foreign exchange business, Sara Wardell-Smith, has taken a new position as Americas regional leader in Wells Fargo’s financial institutions group, based in San Francisco. That group provides services to other banks.
The foreign exchange business is now operating under the leadership of Charlotte-based executive Ben Bonner. He reports to the Charlotte-based co-heads of Wells Fargo Securities, Walter Dolhare and Rob Engel.
Wells Fargo Securities provides corporate clients with Wall Street-style services such as merger advice, stock and bond offerings, and securities trading. The unit has about 5,000 employees worldwide, with the largest portion based in Charlotte.
Wells Fargo had not been a big player in the business until buying Charlotte-based Wachovia in 2008.