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Tags: Financial Markets | Money | Wells Fargo | Department of Justice

Wells Fargo to Pay DOJ $37M in FX Overcharging Case

Wells Fargo logo
(Dreamstime)

Monday, 27 September 2021 03:18 PM

Wells Fargo & Co will pay $37.3 million to resolve U.S. government claims it fraudulently overcharged commercial clients on foreign exchange services, the latest in a string of scandals over the bank's treatment of customers.

Monday's settlement resolves U.S. Department of Justice civil fraud charges against the fourth-largest U.S. bank. It includes a $35.3 million fine plus a $2 million forfeiture.

Wells Fargo previously returned $35.3 million to customers as restitution, making its total payout nearly $73 million, court papers show.

The Justice Department said sales specialists jokingly used expressions such as "back the truck up" and "when in doubt, spread them out" when they were overcharging customers, with one referring to the sales group as a "bucket shop."

Spokespeople for the bank did not immediately respond to requests for comment. The settlement was filed with the U.S. District Court in Manhattan and requires a judge's approval.

In afternoon trading, Wells Fargo shares were down 58 cents, or 1.2%, at $47.34.

The San Francisco-based bank has been subject since 2018 to a Federal Reserve cap on assets, which must remain below $1.95 trillion until it improves its governance and risk controls.

Wells Fargo has already paid more than $5 billion in fines since the scandals began in 2016.

On Sept. 22, Fed Chair Jerome Powell said the central bank was closely monitoring the bank's efforts to address "widespread and pervasive" problems.

Powell spoke eight days after Massachusetts U.S. Senator Elizabeth Warren called for Wells Fargo to be broken up.

Monday's settlement resolves claims that Wells Fargo defrauded 771 commercial customers, including many small- and mid-sized businesses, on foreign exchange services between 2010 and 2017.

The government said Wells Fargo systematically charged higher spreads and sales margins than it promised, and encouraged the overcharges by linking specialists' bonuses to how much revenue they generated.

According to court papers, specialists also used what they called the "big figure trick" or "transposition error game" to cheat customers, such as by charging $1.0213 to buy euros instead of $1.0123, picking up an extra 89 basis points. (Reporting by Jonathan Stempel in New York; Editing by Mark Porter)

© 2021 Thomson/Reuters. All rights reserved.


StreetTalk
Wells Fargo & Co will pay $37.3 million to resolve U.S. government claims it fraudulently overcharged commercial clients on foreign exchange services, the latest in a string of scandals over the bank's treatment of customers.
Wells Fargo, Department of Justice
353
2021-18-27
Monday, 27 September 2021 03:18 PM
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