Charles Scharf, chief executive officer of Wells Fargo & Co., listens during a House Financial Services Committee hearing in Washington, D.C., U.S., on Tuesday, March 10, 2020.
Andrew Harrer | Bloomberg | Getty Images
Wells Fargo paid $72.6 million to settle a government lawsuit accusing the bank of defrauding hundreds of commercial customers.
The bank admitted to overcharging 771 businesses on foreign exchange transactions from 2010 through 2017, according to the Justice Department lawsuit filed Monday.
Wells Fargo told the commercial customers they were being charged certain fixed rates, but then incentivized salespeople to “overcharge FX customers,” according to the lawsuit. The bank then concealed the overcharges and gave “false explanations” for the inflated prices, the government said.
“We all put trust in our banking institutions to deal with us honestly, fairly, and transparently when we are their customers,” Audrey Strauss, U.S. Attorney for the Southern District of New York, said late Monday in a release. “For the better part of a decade, Wells Fargo abused this trust, using tricks, false information, and other deceptive practices to fraudulently overcharge customers who used the Bank’s foreign exchange service.”
The settlement is the latest regulatory matter resolved under Wells Fargo CEO Charles Scharf, who was hired in 2019 to clean up the bank’s legal woes that began with a 2016 fake accounts scandal. Earlier this month, Wells Fargo was hit with a $250 million fine on the same day it announced the resolution of a Consumer Financial Protection Bureau consent order.
Wells Fargo issued a statement early Tuesday, calling the behavior in the currency case “unacceptable.”
“We have significantly improved our business policies, procedures and oversight related to the management and pricing of FX transactions,” a spokeswoman said. “We remain committed to serving the needs of our FX clients.”
Roughly half the settlement, $35.3 million, is going directly to the overcharged customers as restitution, the government said. The rest, $37.3 million, will be paid to the U.S. as civil penalties and asset forfeiture under the Financial Institutions Reform Recovery and Enforcement Act.
A whistleblower who kicked off the case in 2016, Paul J. Kohn, is set to receive $1.6 million from proceeds going to the government, the DoJ said.
Correction: Wells Fargo’s total settlement cost is $72.6 million. A previous version reported only part of the agreement.
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The settlement is the latest regulatory matter resolved under Wells Fargo CEO Charles Scharf.