Summary: Wells Fargo said that its legal bill is an estimated $3.3 billion.
On Friday, troubled banking institution Wells Fargo saw its stock price dramatically fall after it revealed a new blunder in its SEC filing. Feeling the public pressure, the bank said that it will now disclose all outstanding legal matters in its quarterly regulatory findings.
Friday’s drop was another bad mark for Wells Fargo, which had a series of public relations disasters to deal with in the past year. The biggest scandal involved its employees creating an elaborate scheme where they would make fake accounts using real customers’ data in order for them to charge fees and meet sales quotas.
On Friday, it was discovered that there were still a large number of fake accounts in existence, despite Wells Fargo’s promise that it would fix the problem. Wells Fargo said that it was committed to winning back the public’s trust and wanted to be transparent with what was happening at the bank, which is why they disclosed the discovered accounts.
“The disclosures included in our filing [Friday] reflect the company’s continued commitment to transparency. Our top priority is to rebuild trust, and this work includes an ongoing effort to identify and address other areas or instances where customers may have experienced financial harm. We remain focused on making things right for our customers, team members, community partners and shareholders and on building a better Wells Fargo,” the bank said.
Everscore ISI told NBC News that Wells Fargo’s commitment to transparency means that the bank will now share all legal matters, not updates, in its quarterly filings.
“Wells Fargo flagged several items in its 10Q filed on Friday, which together, weighed on the stock in late afternoon trading … On our follow-up call, mgmt noted that as Wells Fargo tries to improve its transparency, it has adopted a policy whereby it will disclose all outstanding legal matters (and not just updates) in its 10Q filings, going fwd,” Evercore ISI analyst John Pancari said. “Visibility into the regulatory and legal issues at Wells remains limited, and earnings momentum appears to be suffering somewhat.”
Pancari also told NBC News that Wells Fargo’s admitted its legal bill is almost $3.3 billion.
A year ago, Wells Fargo came under fire with the government for creating the fake accounts, and the company agreed to pay a settlement of $185 million. This summer, the bank’s controversy continued when it was discovered that it had illegally forced auto loan consumers into buying insurance, discriminated against black mortgage loan consumers by giving them higher rates, and overcharged on fees, even if the fees were due to oversights caused by the bank.
Additionally, Bloomberg reports that Wells Fargo is facing fraud lawsuits from investors over shareholder losses.
- Wells Fargo Charging Customers with Unwanted Auto Insurance
- Wells Fargo Allegedly Steered Blacks and Latinos to Costlier Mortgages
- Wells Fargo Employees Caught Creating Millions of Fake Accounts to Collect Fees
- Wells Fargo Settles Fake Account Class-Action Lawsuit