US SEC Fines Wells Fargo $500 Million for Misleading Clients
- The funds from the fine will be distributed to affected clients.
Last week didn't end on the best footing for California-based Wells Fargo & Co., with the Securities and Exchange Commission (SEC) announcing on Friday that it has charged the company for misleading investors, imposing a hefty $500 million fine.
In particular, the US regulator states that Wells Fargo misled investors about the success of its core business strategy when it was opening fake accounts for unaware customers and selling products that weren't being used.
Under an agreement with the regulator, the financial services company has agreed to pay $500 million to settle the charges. This money will be returned to investors. The fine announced on Friday is part of a combined $3 billion Settlement Settlement Settlement in finance refers to the process when a buyer makes payment and receives the agreed-upon services or goods. The term is used on exchanges such as New York Stock Exchange (NYSE) when security changes hands. When the asset is transferred and placed in the new buyer's name, it is considered settled. This process could take a few hours or several days after a trade is made. It depends on the clearance process. In the United States, the settlement date for marketable stocks is usually 2 Settlement in finance refers to the process when a buyer makes payment and receives the agreed-upon services or goods. The term is used on exchanges such as New York Stock Exchange (NYSE) when security changes hands. When the asset is transferred and placed in the new buyer's name, it is considered settled. This process could take a few hours or several days after a trade is made. It depends on the clearance process. In the United States, the settlement date for marketable stocks is usually 2 Read this Term with the SEC and the Department of Justice.
Commenting on the fine, Stephanie Avakian, Co-Director of the SEC's Division of Enforcement, said: "Wells Fargo repeatedly misled investors, including through a misleading performance metric, about what it claimed to be the cornerstone of its Community Bank business model and its ability to grow revenue and earnings. This settlement holds Wells Fargo responsible for its fraud and furthers the SEC's goal of returning funds to harmed investors."
Between 2012 and 2016, according to the order from the SEC, Wells Fargo advertised that investors were having success via its Community Bank's "cross-sell" strategy, which is the selling of additional financial products to existing customers. This was characterized as a key component of its financial success.
However, according to the US watchdog, the financial firm actively tried to make investors reliant on the cross-sell metric, despite the fact that it was inflated by accounts and services that weren't used, needed or authorized.
Wells Fargo ordered to cease and desist
Because of this, the SEC's order finds that Wells Fargo has violated the antifraud provisions of the Securities Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term Act of 1934. In addition to paying the fine, the company has agreed to cease and desist from committing or causing any future violations of these provisions.
Last week didn't end on the best footing for California-based Wells Fargo & Co., with the Securities and Exchange Commission (SEC) announcing on Friday that it has charged the company for misleading investors, imposing a hefty $500 million fine.
In particular, the US regulator states that Wells Fargo misled investors about the success of its core business strategy when it was opening fake accounts for unaware customers and selling products that weren't being used.
Under an agreement with the regulator, the financial services company has agreed to pay $500 million to settle the charges. This money will be returned to investors. The fine announced on Friday is part of a combined $3 billion Settlement Settlement Settlement in finance refers to the process when a buyer makes payment and receives the agreed-upon services or goods. The term is used on exchanges such as New York Stock Exchange (NYSE) when security changes hands. When the asset is transferred and placed in the new buyer's name, it is considered settled. This process could take a few hours or several days after a trade is made. It depends on the clearance process. In the United States, the settlement date for marketable stocks is usually 2 Settlement in finance refers to the process when a buyer makes payment and receives the agreed-upon services or goods. The term is used on exchanges such as New York Stock Exchange (NYSE) when security changes hands. When the asset is transferred and placed in the new buyer's name, it is considered settled. This process could take a few hours or several days after a trade is made. It depends on the clearance process. In the United States, the settlement date for marketable stocks is usually 2 Read this Term with the SEC and the Department of Justice.
Commenting on the fine, Stephanie Avakian, Co-Director of the SEC's Division of Enforcement, said: "Wells Fargo repeatedly misled investors, including through a misleading performance metric, about what it claimed to be the cornerstone of its Community Bank business model and its ability to grow revenue and earnings. This settlement holds Wells Fargo responsible for its fraud and furthers the SEC's goal of returning funds to harmed investors."
Between 2012 and 2016, according to the order from the SEC, Wells Fargo advertised that investors were having success via its Community Bank's "cross-sell" strategy, which is the selling of additional financial products to existing customers. This was characterized as a key component of its financial success.
However, according to the US watchdog, the financial firm actively tried to make investors reliant on the cross-sell metric, despite the fact that it was inflated by accounts and services that weren't used, needed or authorized.
Wells Fargo ordered to cease and desist
Because of this, the SEC's order finds that Wells Fargo has violated the antifraud provisions of the Securities Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term Act of 1934. In addition to paying the fine, the company has agreed to cease and desist from committing or causing any future violations of these provisions.