Slideshow The Many Investigations of Wells Fargo

Published
  • September 30 2016, 12:00pm EDT
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The Many Investigations of Wells Fargo

Since Wells Fargo's settlement three weeks ago with federal regulators over charges thousands of employees opened up millions of fake accounts, the bank's troubles have only grown worse. Lawsuits by former employees have been filed, the bank's chief executive was subject to two disastrous hearings on Capitol Hill and lawmakers are opening calling to break the bank up. But it is the multiple investigations into the bank which may prove to be its toughest challenge. While some relate to the phony accounts, others touch on different issues — and they have been growing. Following is a look at investigations, recent settlements and other actions taken since the news broke in early September.

The Justice Department

The Justice Department has issued subpoenas over the opening of 2 million phony accounts with U.S. attorney's offices in New York, San Francisco and Charlotte, N.C., reportedly vying to take the lead in either civil or criminal charges. The Wells investigation is expected to be an important test case of new Justice Department guidelines to target individual employees rather than just a firm as whole.

Related: Wells Fargo Is Test Case for DOJ Actions Against Individuals
Culture, Incentives at Wells Fargo in Question After $190M Settlement

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The Securities and Exchange Commission

Three Democratic senators, led by Sen. Elizabeth Warren, D-Mass., asked the Securities and Exchange Commission this week to investigate whether Wells Fargo and senior officials violated financial disclosure laws. The senators, including Sen. Jeff Merkley, D-Ore., and Sen. Bob Menendez, D-N.J., want the SEC to determine if senior management signed off on inaccurate financial reporting, failed to disclose investigations into the fake accounts, and fired employees who reportedly spoke up about the wrongdoing.

Related: Wells Probe Needed for Possible SEC Violations: Senators


The Labor Department

The Department of Labor on Tuesday launched a probe into whether Wells Fargo violated labor laws and retaliated against employee whistleblowers that complained of wrongdoing to the company's ethics hotline. The agency's web site, www.dol.gov, currently features a large photo of the Wells Fargo name, asking workers to come forward.

Labor Secretary Thomas Perez said in a letter to Democratic senators that his department would conduct a "top-to-bottom review of cases, complaints, or violations concerning Wells Fargo over the last several years."

The Occupational Safety and Health Administration has received a number of whistleblower complaints from former employees over the last five years, Perez said.

Related: Labor Department to Examine Wells Fargo Workplace Violations


The House and Senate Banking Committees

Committees for House Financial Services (led by Rep. Jeb Hensarling, R-Texas, pictured) and Senate Banking are interviewing witnesses related to the phony accounts. Both panels have held public hearings with Wells Chief Executive Officer John Stumpf, but say they are going to dig deeper. The House panel has said that it wants to interview Carrie Tolstedt, the retiring executive in charge of Wells' community banking division, and Tim Sloan, Stumpf's hand-picked successor.

Related: Lawmakers Ratchet Up Demands for Wells: Break It Up

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Wells Fargo's Internal Investigation

Wells Fargo's board of directors is continuing to look into what led to the opening of phony accounts and whether the situation could have been prevented.

It has already taken some action. The independent board members on Tuesday said that Stumpf had agreed to give up $41 million in unvested stock awards following the launch of an investigation into the company's sales practices. Carrie Tolstedt, the bank's former head of community banking, agreed to forfeit $19 million in unvested stock awards and will not receive retirement benefits worth millions more. Neither Stumpf nor Tolstedt will receive 2016 bonuses and Stumpf will forgo his salary pending the board's investigation.


The Office of the Comptroller of the Currency

While Stumpf was being grilled by House members on Thursday, the Office of the Comptroller of the Currency (led by Tom Curry, pictured) and Justice Department hit Wells Fargo with a $24 million fine for improperly repossessing cars owned by servicemembers.

Bill Baer, the No. 3 official at the Justice Department, said Wells violated the Servicemembers Civil Relief Act as many as 413 times through a pattern of unlawful repossessions from 2008 to 2015. Wells has agreed to pay $4 million in restitution to customers and a $20 million fine to the OCC. The investigation began when the bank repossessed a Ford Escape from a soldier who was ready to deploy to Afghanistan.

Related: Wells Fargo to Pay $24M Tied to Repossessions of Soldiers' Cars


The Commodity Futures Trading Commission

The Commodity Futures Trading Commission, led by Tim Massad, announced this week that Wells Fargo had agreed to pay $400,000 in civil penalties to the agency for a slew of reporting errors in its large trader reports, regulatr reports that Wells was required to submit related to its transactions.

The order said that between March 2013 and November 2015, "every LTR report submitted by [Wells] failed to meet" relevant reporting requirements, omitting or improperly reporting basic data like the reporting entity identifier, swaption expiration dates and notional values, or whether swaps were puts or calls, among other information.

Related: Wells Fargo Slapped with $400K Fine for Swaps Violations

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The State of California

California Treasurer John Chiang suspended Wells Fargo on Wednesday from underwriting state bonds for a year, citing the San Francisco bank's "venal abuse of its customers." Wells was pulled off two major bond deals and was suspended from working as a broker-dealer in buying investments for the treasurer's office for a year. The treasurer also will not make any additional investments in Wells Fargo Securities. "How can I continue to entrust the public's money to an organization which has shown such little regard for the legions of Californians who have placed their financial well-being in its care?" Chiang said.

Related: Wells Fargo Suspended From Underwriting California State Bonds


N.Y.'s MTA

New York's Metropolitan Transportation Authority on Tuesday halted business with Wells Fargo Securities as a senior manager on bond transactions pending a review of the bank's practices.

MTA finance manager Patrick McCoy said a "responsibility review" of Wells Fargo Securities had not been completed. The bank had received conditional approval among seven firms for senior management roles. But the revelations of phony account openings changed that.

"Until such time we will not be using Wells Fargo Securities for any future underwritings," McCoy said.

Related: New York MTA Puts Wells Fargo Business on Hold