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Wells Fargo Is Said to Be Near Settlements Over Sales Practices
The bank would pay penalties to the Justice Department and the Securities and Exchange Commission over a fake-account scandal.
Wells Fargo is preparing to settle with federal prosecutors and the Securities and Exchange Commission over the widespread abuse of customers in its banking, auto lending and mortgage businesses, according to two people familiar with the matter.
The settlements could be announced as soon as Friday, according to the people, who spoke on the condition of anonymity because the agreements were not yet public.
The size of the penalties could not immediately be determined, but Wells Fargo has set aside $3.1 billion to pay legal costs related to the sales practice matters.
Federal prosecutors have also been investigating people connected to the bank, but it was unclear if any criminal charges would be brought against any individuals.
A Wells Fargo spokeswoman declined to comment. Representatives for the Justice Department and the S.E.C. did not immediately respond to requests for comment.
The settlements would be the latest in a series of government penalties against the bank and its former leaders. Just last month, former Wells Fargo executives who presided over the abusive sales practices — including a former chief executive, John G. Stumpf — were subjected to the largest fines ever assessed by bank regulators.
The scandal erupted in 2016 when Wells Fargo revealed that it had opened millions of bank accounts in customers’ names without their knowledge while charging other customers unnecessary fees for auto and home loans. It also admitted to selling some customers unwanted insurance products.
While the settlements would resolve yearslong investigations by the agencies, they would not end the bank’s regulatory woes. For two years, the bank has been operating under growth restrictions imposed by the Federal Reserve, which has said it will not release the bank from those constraints until its leaders can demonstrate that they have restructured its operations to prevent similar abuses.
Regulators are also still seeking penalties against former employees.
On Jan. 23, the Office of the Comptroller of the Currency fined former top executives millions of dollars each; Mr. Stumpf agreed to pay $17.5 million. But others, including Carrie L. Tolstedt, Wells Fargo’s former head of retail banking, are fighting the cases brought by the regulator, which is seeking a $25 million fine against her.
Wells Fargo, the fourth-largest bank in the United States, has been trying to turn itself around and rid itself of a toxic culture that drove employees to resort to fraud to increase their sales performance. In October, the bank hired Charles W. Scharf, a former JPMorgan Chase executive, to be its new leader.
Last month, as regulators announced the multimillion-dollar settlement with the bank’s former chief, Mr. Scharf called the bank’s former sales practices “inexcusable.”
Emily Flitter covers banking and Wall Street. Before joining The Times in 2017, she spent eight years at Reuters, writing about politics, financial crimes and the environment. More about Emily Flitter
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