Wells Fargo's Wealth Management Unit Attracts Justice Department Attention
By Emily Glazer
Wells Fargo & Co.'s problems are expanding to its wealth-management business.
The Justice Department in late 2017 told the bank to conduct an independent investigation of its wealth-management business after whistleblowers from the bank cited sales problems to the agency, people familiar with the matter said.
The bank tapped law firm Shearman & Sterling to conduct the investigation, the people said.
Whistleblowers alleged problems in Wells Fargo's wealth-management business related to pushing particular products or services with an eye toward earning more compensation rather than finding the best fit for the customer, these people said.
The claims include Wells Fargo's brokerage division, which is known as Wells Fargo Advisors, these people said. Wells Fargo's former head of that division, Mary Mack, was tapped in July 2016 to clean up its retail banking business. More recently, she was promoted to also lead its consumer lending unit.
A Wells Fargo spokeswoman declined to comment, while a spokeswoman for the Justice Department had no immediate comment.
It is unclear exactly what Shearman & Sterling has found so far in its investigation.
Shearman & Sterling has represented the bank's board since Wells Fargo disclosed widespread sales practice problems in September 2016. It also spearheaded a 113-page report on the bank's sales practices issues.
The April 2017 report was a long-anticipated deep dive into the questionable sales conduct affecting up to 3.5 million customers that dated back to 2002 and ultimately resulted in a $185 million regulatory penalty in September 2016.
The bank has faced continued problems since then. Most recently, the Federal Reserve announced an unprecedented enforcement action capping the bank's assets. The Fed also said the bank would be replacing four board directors in 2018. The bank has said it is confident it will satisfy the requirements of the Fed action.
Last year, Wells Fargo also improperly charged around 800,000 auto-loan customers and up to 110,000 mortgage customers. The bank has said it is in the process of refunding those customers more than $100 million.
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(END) Dow Jones Newswires
March 01, 2018 11:28 ET (16:28 GMT)Copyright (c) 2018 Dow Jones & Company, Inc.