Wells Fargo’s (WFC) newest settlement will value it $1 billion. Controversies have value the financial institution nearly 10 instances that quantity previously decade.
The lender agreed on Tuesday to pay shareholders $1 billion in damages to settle a class-action lawsuit through which plaintiffs alleged the corporate misled regulators and overstated its progress in addressing the problems that led as much as the 2016 faux accounts scandal. Wells Fargo has been embroiled in controversy that value it billions of {dollars} and quite a lot of executives their jobs after the scandal got here to mild nearly seven years in the past.
A Timeline of Controversy
The faux accounts hit the funds of thousands and thousands of consumers and broken the financial institution’s status. Nevertheless, it wasn’t the one occasion of malpractice. Under is a timeline of settlements together with a number of different scandals:
December 2022: Wells Fargo paid greater than $2 billion to customers and $1.7 billion in civil penalties after the Shopper Monetary Safety Bureau (CFPB) discovered mismanagement—together with unlawful charges and curiosity expenses—in a number of of its largest product traces, akin to auto loans, mortgages, and deposit accounts.
February 2020: Wells Fargo paid $3 billion to settle prison and civil investigations by the Justice Division and Securities and Trade Fee (SEC) into its aggressive gross sales practices between 2002 and 2016. About $500 million was ultimately distributed to buyers.
January 2020: The Workplace of the Comptroller of the Forex (OCC) banned two senior executives at Wells Fargo, former CEO John Stumpf and ex-Head of Neighborhood Financial institution Carrie Tolstedt, from the banking trade. Stumpf and Tolstedt additionally incurred civil penalties of $17.5 million and $17 million, respectively.
2019: After what is taken into account a “uncommon public rebuke” by the OCC, Timothy Sloan resigned because the financial institution’s CEO, the second chief govt to resign in three years. Charles Scharf took over, however different executives continued to depart the lender.
August 2018: The Justice Division levied a $2.1 billion high-quality on Wells Fargo for its actions in the course of the subprime mortgage disaster, significantly its mortgage lending practices between 2005 and 2007.
April 2018: Federal regulators on the CFPB and OCC examined Wells Fargo’s auto mortgage insurance coverage and mortgage lending practices and ordered the financial institution to pay $1 billion in damages.
February 2018: In response to widespread mistreatment of consumers and compliance breakdowns, the Federal Reserve ordered the lender to switch three administrators and restricted its progress till it might see a significant enchancment in governance and controls.
October 2017: Wells Fargo admitted wrongdoing after 110,000 shoppers have been mistakenly fined for lacking a deadline on mortgage funds, though the financial institution was in the end at fault for the delays.
July 2017: As many as 570,000 Wells Fargo prospects have been wrongly charged for auto insurance coverage on automobile loans after the financial institution didn’t confirm whether or not these prospects already had present insurance coverage. Because of this, as much as 20,000 prospects could have defaulted on automobile loans.
April 2017: In its 2017 Gross sales Practices Investigation Report (SPIR), Wells Fargo’s board recognized “cultural, structural, and management points” as the foundation causes of improper gross sales exercise on the firm and revealed that the financial institution’s executives have been conscious of the problems and practices underpinning the faux accounts scandal way back to 2002.
March 2017: After discovering unlawful and discriminatory credit score practices, together with the creation of thousands and thousands of fraudulent accounts, the OCC downgraded Wells Fargo’s score beneath the Neighborhood Reinvestment Act (CRA) to “wants to enhance” from “excellent.”
October 2016: Going through mounting criticism, Wells Fargo CEO John Stumpf retired, surrendering $69 million in compensation by way of forfeiture and clawbacks.
September 2016: Wells Fargo acknowledged it had created 1.5 million faux deposit accounts and 623,000 faux bank card accounts between 2002 and 2016 in prospects’ names with out their information and approval, motivated by unrealistic revenue targets set by firm management. Because of this, the lender was pressured to pay $185 million in damages to the CFPB, OCC, and Metropolis and County of Los Angeles, in what grew to become one of many largest scandals within the firm’s 170-year historical past.
Wells Fargo shares fell 1% yesterday. They’re down 7% year-to-date, roughly matching the efficiency of the broader monetary sector over the identical interval.