New York Securities Lawyer Blog
In late 2017, the Justice Department ordered Wells Fargo & Co. (“Wells Fargo”) to conduct an investigation of its Wealth Management Division (“WFA”), after whistleblowers at the bank alleged sales practice abuses. Wells Fargo released a statement saying that their board was investigating “whether there have been inappropriate referrals or recommendations, including with respect to rollovers for 401(k) plan participants, certain alternative investments, or referrals of brokerage customers to the company’s investment and fiduciary services business.”
Wells Fargo has faced continual and mounting regulatory pressure, with a $185 million penalty in September 2016 for the fraudulent opening of 3.5 million accounts. In February 2018, the Federal Reserve took the unprecedented enforcement action of issuing a cap on Wells Fargo’s assets, citing oversight issues. This investigation, initiated by the Justice Department, may only uncover more unsuitable or fraudulent practices at the troubled bank. Wells Fargo also found that it had improperly over-charged 800,000 auto loan customers, and 110,000 mortgage customers – Wells Fargo is now refunding approximately $100 million to these improperly charged customers.
As the investigation into WFA continues, more improper sales practice abuses may be uncovered. If clients are pushed into high fee accounts, encouraged to buy products on margin (while paying margin interest), overly concentrated in specific sectors, or paying over 300 basis points in fees, there may be regulatory enforcement actions that demand arbitration. In addition to the customers who may have suffered from Wells Fargo’s unsuitable/and or fraudulent actions, Financial Advisors who transitioned to WFA unaware of the problems they were transitioning into, may also have suffered damages.
The attorneys at Lax & Neville LLP have extensive experience in successfully prosecuting claims on behalf of customers who have suffered losses as a result of investment and securities fraud. If you are a victim of fraud, please contact Lax & Neville LLP today at (212) 696-1999 to schedule a consultation.