The United States Securities and Exchange Commission (SEC) has fined Wells Fargo for overcharging investment advisory accounts. According to a statement released by the regulatory body, the American bank will pay $35 million as a civil penalty fee.
In the statement, the SEC revealed that the financial institution gained $26.8 million in advisory fees. More so, the regulator indicated that the excess charges affected 10,900 investment advisory accounts. Also, the order mandates that the bank and its subsidiaries must amend their pre-set advisory fees for certain clients.
The SEC added that henceforth, Wells Fargo must communicate the reduced fees in a handwritten or typed document to the affected clients. Meanwhile, the SEC indicated that Wells Fargo failed to admit or deny the allegations. In addition to the fine, the financial institution agreed to abide by the order of the regulator.
Likewise, the SEC Director of Enforcement Division, Gurbir S. Grewal provided insights into the issues. He explained how Wells Fargo and some of its related firms reduced their advisory fees for certain customers. However, the bank failed to honor the reduction and overcharged users.
The director illustrated that the fine leveled against Wells Fargo indicated that companies must prioritize users’ protection. Grewal added that companies’ focus on expansion must not be to the detriment of their clients. Additionally, the director urged investment advisers to adopt and implement policies that will ensure they honor their agreements with their clients.
Controversies trailing Wells Fargo
The recent order came on the heels of the SEC’s fine against the financial institution for violating some of its regulations. Early this month, reports surfaced that the SEC leveled a fine of $200 million against Wells Fargo for failing to maintain the electronic records of its employees’ conversations.
Then, the regulator ordered the company to desist from violating its laws. The SEC insisted that employees of the fourth-largest U.S. bank must carry out their official activities on transparent platforms.
It is worth mentioning that Wells Fargo has a mixed reputation in the crypto space. This is due to how the bank has been the subject of a lawsuit regarding a crypto Ponzi scheme that defrauded investors more than $30 million in 2020. On the flip side, crypto enthusiasts are familiar with the bank owing to how its debit and credit cards support users to purchase virtual assets.