Federal agency fines Wells Fargo $22 million in whistleblower complaint
Winston-Salem Journal (NC)
A fired Wells Fargo & Co. senior manager could receive more than $22 million from the bank as part of a whistleblower award ordered Thursday by the U.S. Occupational Safety and Health Administration.
The agency determined Wells Fargo violated the whistleblower protection provisions of the Sarbanes-Oxley Act by improperly terminating in 2019 a Chicago area-based senior manager in its commercial banking segment.
The fine involves back wages, interest, lost bonuses and benefits, front pay and compensatory damages.
OSHA said its Chicago office determined Wells Fargo terminated the unidentified senior manager "who had repeatedly voiced concerns to area managers and the corporate ethics line regarding conduct they believed violated relevant financial laws, including wire fraud."
The senior manager was basing the whistleblower complaint upon violations of required training.
"The manager expressed concerns that they were directed to falsify customer information, and alleged that management was engaged in price fixing and interest rate collusion through exclusive dealing," according to the statement.
OSHA said that after the bank "initially failed to provide a reason for the termination, (it) later alleged the manager was terminated as part of a restructuring process."
"However, investigators found the removal was not consistent with Wells Fargo's treatment of other managers removed under the initiative."
Doug Parker, an assistant secretary for OSHA, said "the evidence demonstrates Wells Fargo took retaliatory action against this senior manager for repeatedly expressing concerns about financial management they believed violated federal laws."
Both parties have 30 days from the receipt of OSHA's findings to file objections and request a hearing before an administrative law judge.
Wells Fargo said in a statement it plans to request the hearing, saying it disagrees with the findings, "which were not based on an evidentiary hearing."
"Wells Fargo has zero tolerance for acts of retaliation, and employees are encouraged to report concerns, which will be promptly and thoroughly investigated."
Customer account scandalWells Fargo has been overshadowed by the ripple effects of a fraudulent customer-account scandal that erupted publicly in September 2016.
In April 2022, Wells Fargo chief executive Charlie Scharf said it could be several more years before the bank is allowed by the Federal Reserve to grow beyond the $1.93 trillion asset cap placed on Feb. 3, 2018.
One early ripple came in September 2016 when the federal Consumer Financial Protection Bureau fined the bank a total of $100 million to resolve complaints that dated back to Jan. 1, 2011, that bank employees opened unauthorized accounts in customers' names to meet sales targets.
The CFPB said bank sales staff opened more than 2 million checking and credit-card accounts unauthorized by customers.
That CFPB fine to Wells Fargo was the first in a long series of high-profile legal and regulatory actions against the bank that have added up to at least $7.25 billion to date.
Industry officials said most financial institutions have incentive programs, known as cross selling, for branch employees to sell additional products.
The goal is entrenching a customer so that they are less likely to move their accounts to a competitor, either out of perceived or real inconvenience, or out of loyalty.
In April 2018, Wells Fargo entered into settlement agreements worth a combined $1 billion with the CFRB and the bank's regulator, the U.S. Office of the Comptroller of the Currency.
The settlement addresses regulators concerns about the bank's compliance risk management program, automobile collateral protection insurance policies, and mortgage interest rate lock extensions.
The bank submitted at that time plans to remediate customers affected by the automobile collateral protection insurance and mortgage interest rate lock matters, as well as a plan for the management of remediation activities.
Wells Fargo disclosed in a first-quarter 2021 financial report that it is being investigated by the CFPB involving its handling of consumer accounts.
The bank said the CFPB "is conducting an investigation into whether customers were unduly harmed by the company's historical practices associated with the freezing (and, in many cases, closing) of consumer deposit accounts after the company detected suspected fraudulent activity (by third parties or account holders) that affected those accounts."
CFPB also is investigating "certain of the company's past disclosures to customers regarding the minimum qualifying debit card usage required for customers to receive a waiver of monthly service fees on certain consumer deposit accounts."