Wells Fargo Admits Fake Accounts Scandal, To Pay $3Bn To U.S.
Clearing one of the last legal proceedings against itself, Wells Fargo on Friday admitted to practising fraudulent sales practices that involved creating fake accounts for the sake of meeting targets by the employees and agreed to pay USD 3 billion as part of the legal settlement. Wells Fargo admitted that the company pressurised its employees with unrealistic targets and the employees fulfilled them by resorting to unlawful conducts during the period between 2002 and 2016. Wells Fargo will pay the USD 3 billion penalty to the Justice Department and Securities and Exchange Department of the United States. The company also agreed a three-year deferred prosecution during which the bank will co-operate by every means with the investigations conducted by the government.
According to the statement received from the Justice Department, many of the top executives at Wells Fargo were aware of what was happening within the bank and referred to the scandalous practice as “gaming” since 2002. The CEO of Wells Fargo, Charles Scharf, was critical about what happened and termed it as “reprehensible”. While speaking on a call with reporters, an SEC official stated that USD 500 million of the USD 3 billion penalty will be received by SEC and distributed to the investors who were mislead by the bank regarding its sales practices. The settlement does have a positive side to it for Wells Fargo as well as the bank is now free of civil and criminal liabilities concerned with the case.
Talking about the business end of Wells Fargo, the banking firm invested USD 5 million in a blockchain forensics company, Elliptic, earlier this month. Elliptic recently launched a product, the Elliptic Discovery, that helps banks understand the background of over 200 cryptocurrencies worldwide and build relations accordingly.