$1 Billion Settlement for Wells Fargo Related to Risk Management Claims

On Friday, April 20, 2018, regulators announced a $1 billion fine against Wells Fargo over claims of misconduct and poor oversight in the auto lending and mortgage lending channels of Wells Fargo’s business. This $1 billion settlement with the Consumer Financial Protection Bureau (“CFPB”) and Office of the Comptroller of the Currency was in response to investigations that found Wells Fargo failed to catch or prevent improper charges to consumers. Experts have posited that the myriad regulatory issues that have afflicted Wells Fargo are the result of poor internal controls and incentive structures – employees were given aggressive sales and account opening targets to achieve, and were bonused based on hitting specific hurdles. This aggressive payout system, while common in the industry, appears to have had particularly negative consequences at Wells Fargo, where some employees essentially defrauded both consumers and Wells Fargo itself by receiving…

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