Feds Said to Be Stepping Up Wells Fargo Inquiry

 

(CN) – A federal investigation into Wells Fargo has broadened to include its wealth-management division, the Wall Street Journal reported Friday.

The financial services giant is still dealing with the backwash of impropriety in its retail banking division where employees opened 3.5 million fake accounts without customer authorization as they pursued aggressive sales targets.

The Journal reported Friday that the Justice Department is now looking at whether Wells Fargo made inappropriate recommendations or referrals, or failed to inform customers about potential conflicts of interest.

The report is based on unnamed sources said to be familiar with the matter. The bank has declined to comment.

The report said the FBI has interviewed some employees in the Phoenix area as the Justice Department and Securities and Exchange Commission expand the scope of an investigation into sales practices beyond Wells Fargo’s retail division.

 

The bank previously disclosed in a securities filing that it is conducting its own internal investigation into its wealth-management business, and is reviewing the fees it charged customers in those accounts, including potential overcharges. Both of those investigations are in the early stages, the bank said.

Earlier this year, the Federal Reserve put significant restrictions on the San Francisco bank citing “widespread consumer abuses.” The bank is replacing four members of its board and its asset level has been frozen by the Fed until internal controls are improved.

Separate from the sales-practices and the reported wealth-management investigations, Wells Fargo is under investigation for potentially overcharging corporate customers in foreign-exchange transactions as well as an investigation into its auto-lending business, where it forced auto insurance policies onto customers who did not need them.

The Associated Press contributed to this report.

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