Wells Fargo to pay $ 37.3 million to settle US claims it fraudulently overcharged its customers
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NEW YORK, Sept. 27 (Reuters) – Wells Fargo & Co (WFC.N) will pay $ 37.3 million to settle claims by the U.S. government that it fraudulently overcharged business customers on foreign exchange services, the latest d ‘a series of scandals concerning the treatment of customers by the bank.
Monday’s settlement resolves the US Department of Justice’s civil fraud charges against America’s fourth-largest bank and includes a fine of $ 35.3 million plus a forfeiture of $ 2 million.
Wells Fargo previously returned $ 35.3 million to customers as restitution, bringing its total payment to about $ 72.7 million.
The Justice Department said sales specialists jokingly used phrases such as “back up the truck” and “if in doubt, spread them out” when overcharging customers, with one calling the “bucket store” sales group.
Wells Fargo declined to comment, pending the required approval of the settlement by U.S. District Judge John Koeltl in federal court in Manhattan.
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 September 22, Fed Chairman Jerome Powell said the central bank was closely monitoring the bank’s efforts to address “widespread and pervasive” problems. Read more
Powell spoke eight days after U.S. Senator from Massachusetts Elizabeth Warren called for Wells Fargo to be separated. Read more
Shares of Wells Fargo closed down 36 cents, or 0.8%, at $ 47.56.
Monday’s settlement resolves allegations that Wells Fargo defrauded 771 business customers, including many small and medium-sized businesses, on foreign exchange services between 2010 and 2017.
The government said Wells Fargo consistently charges higher selling spreads and margins than it promised, and encourages overcharging by tying specialist bonuses to the revenue they generate.
According to court documents, the specialists also used what they called the “big figure trick” or the “mapping error game” to trick customers, for example by charging $ 1.0213 to buy euros. instead of $ 1.0123, picking up an additional 89 basis points.
One whistleblower, former Wells Fargo forex trader Paul Kohn, will receive $ 1.6 million from the bank’s deposit, the maximum available.
His lawyer, Jonathan Willens, said Kohn had worked at a different desk than where the alleged fraud occurred, but was in the same room and could hear what had happened.
Report by Jonathan Stempel in New York; Editing by Mark Porter and Dan Grebler