Wells Fargo said to face DOJ probe of wholesale-banking unit
Wells Fargo is facing a Department of Justice investigation into whether employees in the company’s wholesale-banking business improperly altered customer data, a person familiar with the matter says.
The changes were made to meet a regulatory deadline, the Wall Street Journal previously reported.
“This particular situation involved a new process and a new required document called Certification of Beneficial Owners that our team members have to complete to help ensure we know our customers,” Alan Elias, a spokesman for the San Francisco-based bank, says.
“We’ve recognized that in certain circumstances additional training and new procedures were needed and have now been applied.”
Elias, who declined to comment on the Justice Department’s involvement, said customers weren’t negatively affected by the actions, but added that “we take all issues relative to documentation seriously. If we get something wrong, we fix it.”
Some workers added information to internal customer records without the clients’ knowledge, a person briefed on the situation said in May. The bank discovered the improper activity and reported it to the Office of the Comptroller of the Currency, the person said.
A Justice Department spokesman declined to comment on the probe.
Wells Fargo has struggled to move past a wave of scandals, which led to a Federal Reserve ban on increasing assets until the lender fixes its missteps.
The problems began erupting in 2016, when regulators said the bank had opened millions of accounts without customers’ permission, leading to a public outcry and spurring additional scrutiny. Incorrect fees in the firm’s wealth-management unit and inconsistent pricing in the foreign-exchange business came next.
Last month, the bank disclosed another round of lapses, saying it faces a U.S. inquiry into its purchase of low-income housing credits and conceding it may have unnecessarily foreclosed on about 400 homeowners.
New issues emerging across business lines put pressure on CEO Tim Sloan, who has promised to correct the errors and shore up operational and risk management. Sloan led the wholesale unit prior to being named CEO in 2016.
“The more the cultural lapses spread beyond the consumer and community bank to other parts of the institution, especially wholesale, the more Tim Sloan’s job is at risk because he was part of those other pieces,” Charles Peabody, a Portales Partners analyst, says. “I think it increases the risk of his departure.”
The more investigations there are, the greater the chances that customers may be less willing to do increase their business with Wells Fargo, Peabody said, predicting a “disappointing revenue story.”