Wells Fargo investors to get $500M civil settlement

Wells Fargo has agreed to a $3 billion settlement to resolve its fake account scandal, the Department of Justice announced Friday.

As part of the settlement, the bank admitted that it wrongly collected millions of dollars in fees and interest, harmed the credit ratings of some customers and illegally used customers’ private information, officials said.

Unrealistic sales goals led to millions of accounts being opened without customers’ knowledge or under false pretenses, Wells Fargo has admitted.

The three-year deferred prosecution agreement will clear Wells Fargo & Company and its subsidiary, Wells Fargo Bank, N.A., of their potential criminal and civil liability stemming from the practices, as long as the companies comply with certain conditions and continue to cooperate with government investigators.

The Securities and Exchange Commission will distribute a $500 million civil penalty to investors as part of the deal.

Michael D. Granston, deputy assistant attorney general with the Department of Justice’s Civil Division, said both customers and competitors were harmed by the bank’s actions.

“This settlement holds Wells Fargo accountable for tolerating fraudulent conduct that is remarkable both for its duration and scope, and for its blatant disregard of customer’s private information,” Granston said in a written statement.

A focus on increasing sales volume and annual sales growth pressured employees to sell existing customers on new financial products, Wells Fargo admitted. Its community banks’ “onerous sales goals” and pressure from management pushed thousands of employees to engage in the illegal conduct that included fraud, identity theft and the falsification of bank records, in addition to generally unethical selling practices.

Employees would “game” the numbers by using customers’ identities without consent to open checking, savings, debit card, credit card and other accounts, the bank admitted. Employees forged signatures to open accounts, created PINs to activate unauthorized debit cards and moved millions of accounts. They altered customers’ contact information in order to prevent the victims from learning what happened. Read more at FOX Business