Receiving Wide Coverage ...
Wells probed: Federal prosecutors in at least three districts have begun investigating Wells Fargo's sales practices in the wake of last week's $185 million settlement. The Wall Street Journal reported that federal prosecutors in Manhattan and San Francisco sent subpoenas to the bank. The investigation "is focusing on whether someone senior within the bank directed employees to falsify documents in conjunction with the opening of accounts and products without consumers' knowledge or authorization," the Journal reported. "Prosecutors are also focusing on whether there was willful blindness to sales practices on the part of executives at the bank."
"The subpoenas from federal prosecutors raise the prospect that the investigation, while in its early stages, could lead to criminal charges for the bank or its employees," said the New York Times, which also reported that prosecutors in North Carolina, where the bank has major operations, are also investigating the matter. "Another option is for prosecutors to handle the investigation as a civil fraud matter, which would require a lower burden of proof."
And, as if Wells doesn't have enough to worry about, a shareholder activist who was puishing Wells Fargo to split the roles of chairman and chief executive is now looking for an even bigger shake-up of the bank's board following the scandal. Gerald Armstrong, described by the Financial Times as "among the most prolific of a group of activists who submit proposals to US shareholder meetings," is using the scandal to argue that Wells needs to "refresh a clubby board." The paper's own investigation found Wells "has one of the longest serving and oldest boards among the large US banks, data that is likely to raise further questions about the quality of its corporate governance."
"How can they argue against my proposal now?" Armstrong asked. "Where is the board? Where is the audit committee of the board? It appears they go to the meetings, they pick up their cheques and they go home."Wall Street Journal, Financial Times, New York Times, Washington Post, American Banker
Wall Street Journal
To sue or not to sue: A group representing some of the largest U.S. banks said the Federal Reserve likely "acted illegally" in adopting parts of its annual bank stress tests, "the latest evidence that some in the banking industry are contemplating a potential lawsuit," the paper reports. The Committee on Capital Markets Regulation, which includes representatives from JPMorgan Chase, Citigroup, Goldman Sachs and Wells Fargo, released a paper Thursday detailing its findings. "It is extremely rare for banks to sue their regulator," the Journal said, while noting that the banks "may still decide that the potential costs of such a lawsuit outweigh the benefits."
Better than expected: Citigroup said its trading revenue so far this quarter is above expectations. Speaking at a conference Wednesday, CFO John Gerspach said trading revenue, while down slightly from the second quarter, "would be up by mid-single digits" compared to a year ago, driven by strength in interest rates and currencies. Trading revenue at many big banks jumped in the second quarter due to volatility caused by concern about the June Brexit vote.
Banned?: Wells Fargo isn't the only big bank feeling the heat over sales practices. The U.K.'s Financial Conduct Authority is planning to ban Andrew Tinney, the former chief operating officer of Barclay's wealth division, for allegedly suppressing an internal report that described a culture of "revenue at all costs" at the bank's U.S. wealth unit. The FCA accused Tinney, the only senior Barclays manager who saw a copy of the report, of taking "steps which aimed to ensure that the Report would not be seen by or available to those senior individuals referred to above or anyone else at the firm." Tinney denies the allegations.
Good and bad?: Atom Bank, which the Financial Times describes as the U.K.'s first app-based bank, registered nearly 40,000 potential customers, but only 2,000 actually opened accounts, "an early sign of the challenges start-ups face as they attempt to exploit the shift to mobile banking." Atom Bank, which opened last April, is backed by BBVA, and is so far offering savings accounts and loans. The 2,000 customers have a collective £18 million in savings balances, or about £9,000 each.