(Bloomberg) — Wells Fargo & Co. agreed to pay $37 million to settle U.S. claims that it overcharged almost 800 commercial customers that used its foreign exchange services, the latest in a series of scandals at the bank.
Most Read from Bloomberg
Wells Fargo ultimately reaped tens of millions of dollars in foreign exchange revenue by defrauding the customers, many of them small or medium-size businesses and banks, from 2010 through 2017, according to a complaint and settlement agreement filed by the Justice Department in federal court in New York on Monday.
Shares of Wells Fargo fell as much as 3.7%. The stock was down 1.3% to $46.30 at 2 p.m. in New York.
The settlement of the lawsuit, which refers to a “brazen and wide-ranging fraud,” marks the most recent event in a half-decade-long saga for the firm. Problems first emerged in 2016 in the community bank and later multiplied across divisions, leading to billions of dollars in fines and settlements and the resignations of two chief executive officers. Wells Fargo is still subject to an asset cap from the Federal Reserve, limiting its size to its level at the end of 2017.
Read More: Wells Fargo Risks Regulatory Action Over Pace of Restitution
The bank didn’t immediately respond to a request for comment.
Some FX sales employees at Wells Fargo received bonuses of more than $1 million a year, while the bank failed to create safeguards and training procedures for how fixed-pricing agreements should be negotiated and implemented, according to the lawsuit, by the U.S. attorney’s office in Manhattan.
“As a result of the improper incentives and lack of oversight, a culture developed in which Wells Fargo FX sales specialists were comfortable repeatedly defrauding the bank’s customers,” the complaint says, which puts the number of defrauded customers at 771. “FX sales specialists openly discussed and even celebrated transactions resulting in larger FX spreads than agreed to with customers and transactions generating large FX revenue.”
The case is U.S. v. Wells Fargo Bank N.A., 21-cv-08007, U.S. District Court, Southern District of New York (Manhattan).
Most Read from Bloomberg Businessweek
©2021 Bloomberg L.P.
Read More:Wells Fargo Pact in U.S. Foreign Exchange Suit Is Latest in Saga
2021-09-27 18:05:49
