Wells Fargo is dishing out tens of millions of dollars to settle allegations that the banking giant charged its customers excessive fees for investment advice.
In a new press release, the U.S. Securities and Exchange Commission (SEC) claims that Wells Fargo collected an additional $26.8 million in advisory fees after overcharging more than 10,900 customers.
The SEC says the overbilling took place when certain financial advisers from Wells Fargo along with the firms acquired by the lender agreed to reduce the standard advisory fees for some of the banking giant’s customers.
Although the agreement was put into writing at the time the customers’ accounts were opened, Wells Fargo failed to make the changes in its billing systems.
The SEC also claims that the banking giant did not establish measures or policies that could have prevented the overbilling. According to the SEC, Wells Fargo overcharged some customers who opened their accounts before 2014 through December 2022.
Says Gurbir S. Grewal, Director of the SEC’s Enforcement Division,
“For years, Wells Fargo and its predecessor firms negotiated reduced advisory fees with thousands of clients, but failed to honor them, overcharging those clients millions of dollars as a result. Today’s enforcement action underscores the need for firms growing their businesses through acquisition to ensure that their growth does not come at the expense of client protection…
Investment advisers must adopt and implement policies and procedures to ensure that they honor their agreements with all of their clients, including legacy clients of predecessor firms.”
Wells Fargo has agreed to pay a $35 million civil penalty without admitting or denying the charges.
The lender also shelled out $40 million, including interest, to reimburse customers who paid the additional advisory fees.