Wells Fargo has agreed to pay $3 billion to settle claims related to its creation of millions of fake accounts to meet sales goals, including $500 million that will be returned to investors, the Securities and Exchange Commission said Friday.
The agreement, with the SEC and Justice Department, says the banking giant misled investors about its strategy of selling additional financial products to existing customers, according to the SEC. That ”cross-sell” strategy was “inflated by accounts and services that were unused, unneeded, or unauthorized,” the SEC said.
From 2002 to 2016, Wells Fargo opened millions of financial accounts that were unauthorized or fraudulent. Wells Fargo also pressured customers to buy products they didn’t need, the SEC said.
“Wells Fargo repeatedly misled investors, including through a misleading performance metric, about what it claimed to be the cornerstone of its Community Bank business model and its ability to grow revenue and earnings,” said Stephanie Avakian, co-director of the SEC’s division of enforcement.
The company agreed to not commit the violations in the future and pay a $500 million civil penalty, which the SEC will distribute to investors.
“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 is built,” company CEO Charlie Scharf said in a statement. “Our customers, shareholders and employees deserved more from the leadership of this company.”