Wells Fargo Settles $35 Million Penalty for Alleged Excessive Charges to Millions of Customers

Wells Fargo is in the process of disbursing tens of millions of dollars to resolve allegations regarding the imposition of excessive fees on its clients for investment advisory services.

According to a recent press release, the U.S. Securities and Exchange Commission (SEC) contends that Wells Fargo accumulated an additional $26.8 million in advisory charges subsequent to overcharging a customer base exceeding 10,900 individuals.

The SEC asserts that this overbilling transpired when specific financial advisors affiliated with Wells Fargo, as well as the entities assimilated by the financial institution, concurred to reduce the standard advisory fees applicable to select clients of the banking corporation.

Even though these agreements were formally documented at the time of clients’ account initiation, Wells Fargo neglected to incorporate the alterations within its billing systems.

Additionally, the SEC alleges that Wells Fargo neglected to establish protocols or guidelines that could have forestalled the overbilling issue. The SEC further highlights that the bank overcharged certain clients who had initiated their accounts prior to 2014, spanning through December 2022.

Gurbir S. Grewal, Director of the SEC’s Enforcement Division, expounds, “Over a prolonged period, Wells Fargo and its antecedent entities negotiated lowered advisory fees with numerous clientele, but regrettably failed to uphold these arrangements, thereby subjecting these clients to multimillion-dollar overcharges. Today’s enforcement action underscores the imperative for enterprises that augment their operations via acquisitions to ensure that such expansion transpires without compromising client safeguarding… Investment advisors must embrace and implement policies and procedures that ensure the dutiful observance of agreements with all clientele, encompassing those inherited from precursor establishments.”

Wells Fargo has concurred to a $35 million civil fine devoid of any admission or acknowledgment of the allegations.

The institution has also allocated $40 million, inclusive of accrued interest, for the restitution of clients who had remitted the surplus advisory fees.

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