Wells Fargo and the Wall Street Journal appear to be engaged in a spat over the former’s FX business. Posting a story entitled “Wells Fargo Bankers, Chasing Bonuses, Overcharged Hundreds of Clients” yesterday, the newspaper stirred some controversy over the bank’s handling of foreign exchange transactions.
According to the article, some employees of the firm significantly mispriced trades to clients. The California-headquartered financial institution issued a statement rebuking the story, stating that the WSJ misrepresented facts.
The article asserted that clients of Wells Fargo were overcharged by employees deliberately in order to generate higher fees for the bank. The report claims that about 88 percent of the company’s clients that had fee agreements didn’t receive the actual market prices. The WSJ cited anonymous sources claiming that the findings are a result of an internal review.
Wells Fargo stated in an official response that the newspaper was not correct.
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Perry Pelos, Head of Wells Fargo Wholesale Banking, said: “We informed The Wall Street Journal that their story had fundamental inaccuracies before they published. We provided pricing data and other information that revealed inaccuracies in the story or that ware counter to its negative portrayal of our FX business.”
Wells Fargo Claims 0.18% Average Spread
The bank is also vociferously denying the WSJ’s claim that it is pricing FX transactions in the range between 100 – 400 basis points. On the contrary, according to the firm the weighted average spread during 2016 was 18 basis points, compared to an industry average of between 15 to 50 basis points.
The bank states that the WSJ appears to have cherry-picked numbers from lower volume transactions and in less liquid currency pairs where spreads are normally higher.
Last but not least, the article claimed that, similar to a binary options hot sales call centre, a bell was rung when a major sale was executed on the FX floor. The bank says that this ritual has not taken place there “for more than a decade”.
“While we have made some mistakes in the past, we always work to make it right for our customers, and invite them to reach out to us if they have any issues. But, in our view, the article’s characterization of our overall business practices and commitment to our FX customers is misleading and unfair,” said Wells Fargo CEO and President Tim Sloan.