- Wells Fargo will pay $3 billion to the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) as part of a settlement over the bank's fake-accounts scandal, the agencies announced Friday.
- The settlement closes the book on a criminal investigation by the DOJ, and it resolves civil investigations by the DOJ and the SEC.
- As part of the agreement, "Wells Fargo admitted that it collected millions of dollars in fees and interest to which the Company was not entitled, harmed the credit ratings of certain customers, and unlawfully misused customers' sensitive personal information, including customers' means of identification," the DOJ said in a statement.
Part of Wells Fargo's deal includes a deferred prosecution agreement, where the DOJ could dismiss charges if the bank satisfies the government's requirements, including continuing to cooperate with further investigations.
Part of the $3 billion settlement includes $500 million to the SEC, which the agency says it will distribute to harmed investors.
While a hefty fine, it's not the largest the bank has paid out. Wells Fargo paid $5.35 billion in 2012 to state and federal authorities when the country's five largest banks settled investigations into their mortgage lending practices in the years leading up to the 2008 financial crisis, according to The New York Times.
The bank has been prepping for this kind of fine. In August, the bank raised the amount it estimates it will spend on legal fees to $3.9 billion, a 26% jump from the previous figure of $3.1 billion, according to an SEC filing.
"The conduct at the core of today’s settlements — and the past culture that gave rise to it — are reprehensible and wholly inconsistent with the values on which Wells Fargo was built," he said. "While today's announcement is a significant step in bringing this chapter to a close, there's still more work we must do to rebuild the trust we lost. We are committing all necessary resources to ensure that nothing like this happens again, while also driving Wells Fargo forward."
Wells Fargo is currently operating under an asset cap set by the Federal Reserve, restricting the bank's growth until it "sufficiently improves its governance and controls."
Former Wells Fargo executives have also been held accountable for their connections to the scandal. Ex-CEO John Stumpf agreed to pay a settlement of $17.5 million, the Office of the Comptroller of the Currency (OCC) announced last month. The former executive is also permanently barred from working in the banking industry.
The OCC also announced charges against five other former bank managers, as well as settlements with two other former executives, for their roles in the bank's sales misconduct.