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Wells Fargo Stock Slips on $37 Million Foreign Exchange Lawsuit Settlement

Wells Fargo agrees to pay a $37 million settlement after allegedly overcharging 771 businesses on foreign-exchange transactions.

Wells Fargo  (WFC) - Get Wells Fargo & Company Report edged lower Monday after the scandal-plagued bank agreed to pay $37 million to settle claims that it overcharged over 700 commercial customers that used its foreign exchange services.

Shares of the San Francisco company were down 0.7% to $47.60 at last check.

Wells Fargo said in a statement that "this past behavior is unacceptable."

The bank allegedly overcharged 771 businesses on foreign-exchange transactions from 2010 through 2017, according to the U.S. Justice Department lawsuit and settlement filed in federal court in New York.

The lawsuit describes a "brazen and wide-ranging fraud."

Some FX sales employees at Wells Fargo received bonuses of more than $1 million a year, according to the lawsuit, while the bank failed to create safeguards and training procedures for how fixed-pricing agreements should be negotiated and implemented.

"As a result of the improper incentives and lack of oversight, a culture developed in which Wells Fargo FX sales specialists were comfortable repeatedly defrauding the bank’s customers,” the complaint said. “FX sales specialists openly discussed and even celebrated transactions resulting in larger FX spreads than agreed to with customers and transactions generating large FX revenue.”

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Wells Fargo previously returned $35.3 million to customers as restitution, making its total payout nearly $73 million, court papers show.

The company said in a statement that the settlement "reflects a $37.3 million payment related to pricing issues in our FX business that occurred prior to 2017.

"This past behavior is unacceptable," Wells Fargo said. "Since that time, Wells Fargo has paid approximately $35 million to fully remediate affected clients and extensively reviewed our FX pricing practices and procedures."

The company said it has "significantly improved our business policies, procedures and oversight related to the management and pricing of FX transactions. We remained committed to serving the needs of our FX clients."

The Federal Reserve accepted the bank's overhaul plan in February after the central bank found that Wells Fargo had defrauded customers through techniques such as establishing unauthorized accounts.

Last year, Wells Fargo said it would pay $3 billion to settle investigations by the Securities and Exchange Commission and the Justice Department into the fake-accounts scandal. 

Earlier this month, Sen. Elizabeth Warren (D-Mass) urged the Federal Reserve to break up the bank, citing consumer risk.

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