California-based firm Wells Fargo & Co. was charged for misleading investors about the success of its core business strategy, the Securities and Exchange Commission (SEC) announced last week.
According to the regulator, the company has agreed to pay $500 million to settle the charges, which will be returned to investors. The payment is part of a combined $3 billion settlement with the SEC and the Department of Justice.
Between 2012 and 2016, the company publicly touted to investors the success of its Community Bank’s “cross-sell” strategy – selling additional financial products to its existing customers – which it characterized as a key component of its financial success. However, Wells Fargo repeatedly misled investors and during the period from 2002 to 2016, the company opened millions of accounts of financial products that were unauthorized or fraudulent.