US government fines Wells Fargo $ 3 billion for its 'staggering' fake-accounts scandal – CNN, CNN

US government fines Wells Fargo $ 3 billion for its 'staggering' fake-accounts scandal – CNN, CNN

New York (CNN Business) Wells Fargo was hit with a $ 3 billion fine Friday by federal authorities outraged by the millions of fake accounts created at the troubled bank over many years.

The settlement with the Justice Department and Securities and Exchange Commission, years in the making, resolves Wells Fargo’s criminal and civil liabilities for the fake-accounts scandal that erupted nearly four years ago.

The deal does not, however, remove the threat of prosecution against current and former Wells Fargo employees.

Prosecutors slammed Wells Fargo for the “staggering size, scope and duration” of the unlawful conduct uncovered at one of America’s largest and most powerful banks.

    As part of the deal, Wells Fargo admitted that between and , it falsified bank records, harmed the credit ratings of customers, unlawfully misused their personal information and wrongfully collected millions of dollars in fees and interest.

    “Today’s announcement should serve as a stark reminder that no institution is too big, too powerful, or too well-known to be held accountable and face enforcement action for its wrongdoings, “US Attorney Andrew Murray for the Western District of North Carolina said in a statement.

    The settlement focused squarely on Wells Fargo’s fake-accounts scandal, not the mistreatment of workers , auto borrowers , homebuyers and other customers that the bank has been accused of in recent years.

    Authorities said Friday that the criminal investigation into false bank records and identify theft at Wells Fargo is being resolved by what’s known as a deferred prosecution agreement. Under that agreement, authorities have agreed not to prosecute Wells Fargo for three years as long as it abides by certain conditions, including its continued cooperation with “further” government investigations.

    In a statement, Wells Fargo CEO Charlie Scharf, who joined the company in September, said, “the conduct at the core of today’s settlements – and the past culture that gave rise to it – are reprehensible and wholly inconsistent with the values ​​on which Wells Fargo was built. Our customers, shareholders and employees deserved more from the leadership of this company. “

    Wells Fargo has also reached a civil settlement over its creation of false bank records with the SEC over its conduct. The $ 3 billion fine resolves all three investigations.

    Remarkable ‘fraudulent conduct

    The SEC and Justice Department’s settlement still leaves open the possibility that current and former Wells Fargo employees could be prosecuted. And in the agreement Wells Fargo admits that

    senior executives were aware of the illegal activity long ago.

    “The top managers of the community bank were aware of the unlawful and unethical gaming practices as early as , “the settlement said.

    Yet Wells Fargo executives repeatedly refused to acknowledge the shady behavior was being driven by the bank’s wildly unrealistic sales goals, which were at the heart of the company business model. Authorities said that senior executives at the community bank “minimized the problems” by shifting the blame to “individual misconduct instead of the sales model itself.”

    “This settlement holds Wells Fargo accountable for tolerating fraudulent conduct that is remarkable both for its duration and scope, and for its blatant disregard of customers’ private information, “Michael Granston, deputy assistant attorney general at the Department of Justice’s civil division, said in the statement.

    Not out of the penalty box yet

    The agreement removes a major cloud that has been hovering above Wells Fargo for years and shows the emphasis by the bank’s new management to move past the scandals. Scharf, the well-respected former CEO of Visa (V ) and Bank of New York Mellon

    . BK

    ) was hired last year to get the tarnished bank back on track.

    But Wells Fargo’s legal troubles are far from over.

    The settlement does not include the Labor Department, which launched a probe in 2018 into allegations that Wells Fargo committed wage theft and retaliated against whistleblowers. Multiple former Wells Fargo workers told CNN Business in 2016 that they were fired after calling the bank’s ethics hotline.

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