Wells Fargo overcharged nearly 11,000 investment accounts with advisory fees, SEC alleges
SEC: Wells Fargo overcharged customers
New York (CNN) — For years, Wells Fargo overcharged almost 11,000 investment advisory accounts about $27 million in fees, federal regulators alleged on Friday.
The Securities and Exchange Commission said Wells Fargo’s fees were excessive.
Wells Fargo agreed to pay a $35 million civil penalty to settle the matter, without admitting or denying the SEC charges.
The agency said Wells Fargo also paid account holders about $40 million — including interest — to reimburse customers who’d been overcharged.
According to the SEC, the excessive fees happened when certain Wells Fargo financial advisers and ones from firms the bank has since acquired agreed to reduce standard advisory fees for certain clients. However, the SEC found that account processing employees at Wells Fargo and predecessor firms sometimes failed to enter the lowered advisory fee rates into the billing systems.
Regulators said Wells Fargo failed to use compliance systems designed to ensure billing systems contained accurate data and didn’t effectively monitor that the bank was not overcharging clients. The SEC also said Wells Fargo overcharged some clients who opened accounts prior to 2014 through the end of 2022.
“Today’s enforcement action underscores the need for firms growing their businesses through acquisition to ensure that their growth does not come at the expense of client protection,” Gurbir Grewal, director of the SEC’s enforcement division, said in a statement.
Wells Fargo Advisors, one of the biggest brokerage firms in the country, traces its history back to AG Edwards, which merged with Wachovia in 2007. Wells Fargo then acquired Wachovia during the Great Recession.
Wells Fargo spokesperson Caroline Szyperski said Wells Fargo Advisors conducted a “thorough review” of accounts and has fully reimbursed affected customers.
“We’re pleased to resolve this matter,” the Wells Fargo spokesperson said. “The process that caused this issue was corrected nearly a decade ago.”
The SEC settlement is just the latest in a long string of troubles for Wells Fargo.
Late last year, federal regulators fined Wells Fargo a record $1.7 billion for “widespread mismanagement” over multiple years that harmed more than 16 million consumer accounts.
More recently, Wells Fargo has been hit by glitches, including one this week that has disrupted the ability of customers to transfer funds and use their ATM cards. Earlier this month, a technical glitch made some customers’ direct deposits disappear from their bank accounts.