Wells Fargo Agrees To Pay USD 3 Billion In Penalties To Settle Fake Accounts Scandal

Wells Fargo & Co has agreed to pay USD 3 billion in penalties to settle criminal and civil probes into fake accounts scandal, the Department of Justice said. The nation’s fourth biggest bank has admitted that it pressurized employees in the fake accounts scandal. Under pressure, bank employees opened millions of accounts and created credit cards without consent. The American multinational financial services company has also accepted to misusing personal information and harming credit rations of certain customers. It has already paid out USD 4 billion in financial penalties related to wrong business practices.

The US Justice Department said that Wells Fargo – headquartered in San Francisco, California – collected millions of dollars in interest and fees because of the wrongful sales practices. Nick Hanna, US Attorney for the Central District of California, said that this went on for years. While USD 2.5 billion of the penalties would go to the federal government, the rest will be given back to investors. Without commenting on if future prosecutions would occur in the scandal, Hanna said that the investigation will continue. The bank has been asked to continue to cooperate with any ongoing investigation. Wells Fargo’s new chief executive Charles Scharf said that the conduct was inconsistent with the values on which the bank was built. Scharf also said that the settlement has brought this chapter to a close but a lot more needs to be done to rebuild the lost trust.

Settling the ongoing investigation is a milestone for Scharf, who joined the bank just after the third anniversary of the scandal. The scandal involved bank employees resorting to unlawful means including identity theft. Employees even forged signatures of customers to open bank accounts without authorization. They also created pin and activated unauthorized debit cards. The practice was referred to as ‘gaming’ within the bank, the Justice Department said. Last month, a US bank regulator charged several former executives of Wells Fargo for their involvement in the scandal.