Wells Fargo Overcharges its Wealth Management Customers

On Thursday, Wells Fargo afflictions deepened as the bank admitted that it had overcharged customers at its wealth management business, while the scandals that have already hit its other divisions generated new boardroom departures and fresh criticism on Capitol Hill.

Late last year, the Department of Justice told Wells Fargo to conduct an independent investigation of its wealth-management business after whistle-blowers from the bank alleged sales problems to the agency, according to the people who are familiar with the matter.

Wells Fargo, the third largest U.S. bank by assets, has been hit by harmful revelations over the past 18 months about the treatment of the bank to its customers in a wide range of areas from bank accounts to car loans.

Federal authorities are now examining possible “inappropriate referrals or recommendations” at the division, which has about 35,000 employees and $1.9 trillion in assets under its management.

Meanwhile, the bank disclosed the board’s investigation in a securities filing, stating that it was “in response to inquiries from federal government agencies.”

Wells Fargo also stated that the review of the board is assessing “whether there have been inappropriate referrals or recommendations, including with respect to rollovers for 401[k] plan participants, certain alternative investments, or referrals of brokerage customers to the company’s investment and fiduciary services business.”

Four Board Members of Wells Fargo to Retire

Four board members of Wells Fargo, including its three longest-serving directors, are planning to retire next month amid the increasing pressure for new oversight as an 18-month scandal continues to expand.

According to the bank, Federico F. Pena, Lloyd H. Dean, Enrique Hernandez Jr., and John S. Chen will leave at the annual shareholder meeting of the company on April 24.

Wells Fargo formerly signaled plans to replace four directors this year. However, the announcement on Thursday came as its legal and regulatory struggles expanded to previously untarnished businesses.

Last month, John Chiang, a California State Treasurer, who is also on the boards of the state’s largest pension funds, stated that he will “raise holy hell” if the four Wells Fargo directors are not gone before the annual meeting of the bank.

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