Jeff Fawkes is a seasoned investment professional and a crypto analyst. He has a dual degree in Business Administration and Creative Writing and is passionate when it comes to how technology impacts our society.
The U.S. government has concluded a deep investigation into what Wells Fargo has been doing in the last 15 years. The bank is paying billions to the state now because their cheatings were hurting the clients.
Wells Fargo, SEC, and the DOJ are driving in another financial drama. Wells Fargo went ahead to forging the client’s signatures on a contract, putting the client’s money to unauthorized accounts, and lying to the investors. They also performed personal data theft, making the clients wonder how other corporations know their phone numbers. The bank wasn’t taking off more in fees for an ATM withdrawal. It’s too small for them, Wells Fargo is not some small-grade bank from a third world country. They were playing big, but now… they are paying big.
Unstoppable Banking Rampage Is Over?
The announcement by the U.S. Department of Justice (DOJ) was made last Friday. It shows that the banks are paying huge money for fraud, being ‘too big to fail’. Some of the readers may be unaware of the fact. Many large-scale banks continuously pay penalties for fraud and money laundering. The interesting part of this saga is that the bankers avoid prison terms. The bank just pays the crazy fee to the government and continue working.
According to the investigation, the bank was pushing on its office workers from 2002 till 2016. The management was stating that the workers must achieve significant sales. They were thinking about the ways to accomplish such a task.
Since a part of the clients kept refusing the credit lines and offers, bankers decided to move the existing client’s funds out to third party accounts. The DOJ stated:
“Wells Fargo admitted that it collected millions of dollars in fees and interest to which the company was not entitled, harmed the credit ratings of certain customers, and unlawfully misused customers’ sensitive personal information, including customers’ means of identification.”
Here’s how the U.S. Attorney Andrew Murray comments the decision:
“When a reputable institution like Wells Fargo caves to the pernicious forces of greed, and puts its interests ahead of those of the customers it claims to serve, my office will not sit idle”
Wells Fargo Pays 3 Billion for 15 Years of Cheating
Per the DOJ investigators, the bank was asking for punishments since 1998. Back then, the bank has decided to focus the energy on increasing sales with any means possible. Starting in 2012, the bank started performing ‘gaming practices’. These include the creation of fake agreements, forging signatures, opening new debit cards using the client’s credentials (without permission), and so on.
They have changed the phone numbers of clients within the bank’s database so that the bank won’t send out the SMS messages to them. Every time the office crooks were withdrawing money from the shady scheme (or a cryptocurrency exchange?), the SMS notification went to the wrong number. That’s how some clients of the bank didn’t know that they have additional financial accounts and shady operations on them.
Some of the bank workers were also preventing the managers and system engineers from conducting surveys with the bank’s clients. The honest supervisors didn’t know that the clients are not receiving the SMS messages and so on. Per the DOJ representative:
“The gaming strategies included preventing Wells Fargo employees from reaching customers to conduct customer satisfaction surveys, and encouraging customers to open accounts they neither wanted nor needed.”
SEC Takes 500 Million, Wells Fargo ‘Cooperate’ on Investigations
The government hasn’t fully completed its investigation into the bank’s money moving, but the bank will now ‘cooperate’ with the investigators. Some of the bank’s top managers did know about the shady schemes but remained silent. Now, they will have to open their cards before justice opens prosecution:
“The criminal investigation into false bank records and identity theft is being resolved with a deferred prosecution agreement in which Wells Fargo will not be prosecuted during the three-year term of the agreement if it abides by certain conditions, including continuing to cooperate with further government investigations”
According to the SEC, the bank is paying $500 million because they were lying to the investors. Such a behavior spoiled some client’s credit reputation, caused unauthorized money transfers, and substantial losses.