Wells Fargo to pay $3 Billion to Resolve Fake Account Scandal 

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■ ■ ■  March 9, 2020

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On February 21, 2020, Wells Fargo & Co. agreed to pay a total of $3 Billion to resolve the Department of Justice (DOJ) and U.S. Securities and Exchange Commission (SEC) investigation accusing the company of creating fake accounts. This scandal has been haunting the company since 2016 when regulators accused company employees of opening millions of accounts for customers without their knowledge. The company has also been accused of illegally repossessing military service members’ vehicles, charging improper mortgage fees, and requesting auto-loan borrowers to pay for unnecessary “collateral protection insurance.”

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As part of their agreement with various U.S. Attorney’s Offices, Wells Fargo admitted that as a result of pushing for increased sales the company took in millions in wrongful fees and interest, used customer information without their authorization and in the process damaged customer credit ratings and opened millions of fraudulent customer accounts. The bank has also entered into a three-year deferred prosecution agreement (DPA) ending a federal investigation into identity theft and other criminal misconduct. The $3 Billion payment will settle DOJ civil claims, and $500 million of which will go to the SEC for distribution to investors. The government’s decision to enter the DPA and civil settlement took into consideration several factors, including the bank’s cooperation with the investigation, its admission of wrongdoing, prior settlements, significant changes in its management including the company’s CEO, and the work they have done to compensate customers who suffered as a result of their actions.

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With increasingly aggressive enforcement efforts and record-setting fines by the DOJ and SEC, MDO Partners encourages companies to establish strong Compliance Programs to mitigate the risk of compliance law and regulatory violations. MDO Partners advises companies on global compliance programs. Our attorneys and advisors have extensive experience advising clients on effective Compliance Programs in over 30 countries.

 

About MDO Partners

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MDO Partners is a boutique law firm that focuses on Corporate, International, and Real Estate Law, as well as Global Compliance and Business Ethics. The firm is comprised of a solid team of attorneys and advisors with more than 100 years of combined experience who are committed to the business goals and best interests of their clients. The firm delivers value-added services of the highest caliber, and serves as a trusted advisor to its clients with a practical and business-savvy approach. For more information on MDO Partners, please visit www.mdopartners.com

 

If you have questions or comments regarding this Alert, please contact one of the attorney's or advisor's listed below.

 

Richard Montes de Oca

Managing Partner

305.704.8452

rmontes@mdopartners.com

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Claudia Herbello

Associate Counsel

305.704.8456

cherbello@mdopartners.com