On Sept. 8, Wells Fargo reached a settlement with federal regulators that will require the banking giant to pay $185 million in fines in a case regarding fake accounts set up by its employees. Regulators said that Wells Fargo's own internal investigation found that employees may have opened deposit accounts and credit card accounts totaling over $2 million without customers' authorization. Despite the multi-million dollar settlement, Wells admitted to no wrongdoing.
Aggressive Sales Culture Reportedly Was Behind the Fake Account Openings
Regulators and other authorities investigating the bank's practices included the Office of the Comptroller of the Currency, the U.S. Consumer Financial Protection Bureau and the Los Angeles City Attorney. They blamed the bank's aggressive sales culture for the activities.
Former Wells employees told investigators that they were forced to quit or were fired if they didn't do what was necessary, including sometimes forging customers' signatures, to meet sales quotas. Those behind these activities, they allege, included regional executives.
Bank Still Faces Suits From Employees and Customers
However, the San Francisco-based company's legal problems are far from over. It is still facing lawsuits from former employees as well as customers. It remains to be seen what, if any, evidence used in the government's case is admissible in the plaintiffs' cases. Even if none of it is, however, attorneys agree that the "optics" of a $185 million settlement aren't good.
Former employees who have filed suits against the company have accused it of failure to pay them for working overtime, wrongful termination and other labor violations. Customers whose names and information were used to open accounts without their knowledge may also have legal recourse. One group of clients reached a settlement with the bank, which was announced the same day as the $185 government settlement.
Going forward, some cases may be handled via arbitration because of the contract that customers sign when they open an account. Others may be resolved in mediation. Still others may go to trial.
As this case shows, even when a company settles any legal issues it may have with the government, it can still face lawsuits from plaintiffs in civil court. It's essential to have a legal strategy to handle the fallout of any and all alleged wrongdoing.
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