The deal, however, does not remove the threat of prosecution against current and former Wells Fargo employees.
Prosecutors denounced Wells Fargo for the “staggering” size, scope and duration “of illegal conduct discovered in one of America’s largest and most powerful banks.
As part of the agreement, Wells Fargo admitted that between 2002 and 2016 it falsified bank records, damaged customer credit ratings, misused their personal information and wrongfully collected millions of dollars in commissions and interest.
“Today’s announcement should serve as a strong reminder that no institution is too large, too powerful or too famous to be held accountable and face law enforcement for its wrongdoing,” said US Attorney Andrew Murray for western district of north carolina a statement.
Authorities said Friday that criminal investigations into fake bank documents and the identification of the theft in Wells Fargo were resolved by what is known as a deferred judicial settlement. Under this agreement, the authorities agreed not to prosecute Wells Fargo for three years, provided they meet certain conditions, including its continued cooperation with “further” government investigations.
In a statement, Wells CEO Fargo Charlie Scharf, who joined the company in September, said: “the conduct at the heart of today’s settlements – and the past culture that originated it – are reprehensible and totally incompatible with the values on which Wells Fargo was built. Our customers, shareholders and employees deserved more from the leadership of this company. “
Wells Fargo has also reached a civil agreement on its creation of fake bank documents with the SEC on its conduct. The $ 3 billion fine resolves all three investigations.
“Significant” fraudulent behavior
“As early as 2002, the heads of the community bank were aware of illegal and unethical gaming practices,” said the transaction.
Yet Wells Fargo executives have repeatedly refused to acknowledge that the shady behavior was driven by the bank’s wildly unrealistic sales targets, which were at the heart of the company’s business model. The authorities said community bank managers “minimized the problems” by shifting the blame to “individual misconduct rather than the sales model itself.”
“This deal holds Wells Fargo responsible for tolerating fraudulent behavior that is notable both for its duration and scope, and for its blatant disregard for customer private information,” said Michael Granston, deputy attorney general at the department’s civil division. of Justice. the declaration.
Not yet out of the penalty area
But Wells Fargo’s legal problems are far from over.
“When bank workers started raising alarms over the fake scandal on Wells Fargo’s account, the managers reacted against us,” said Killian Colin, former Wells Fargo employee and member of the Committee for Better Banks, in a Note. “To make matters worse, frontline employees like us have been unjustly scapegoated for trying to cope with strong sales pressures.
“Today’s settlement could bring some relief to consumers and workers,” he added, “but it does not give up Wells Fargo’s duty to change the culture of the workplace that fueled the disastrous scandal in the first place.”
“It’s a much bigger hurdle. It will take some time,” said Gerard Cassidy, banking analyst at RBC Capital. It is expected that the ceiling and other law enforcement actions against Wells Fargo will not be completely removed until 2022.
Wells Fargo’s stock has suffered
The Department of Justice and the SEC said Friday’s transaction took into account other recent fines imposed on Wells Fargo, as well as the bank’s “extensive cooperation” and efforts to repair customer damage.
In other words, Wells Fargo has been left in the dust.