Friday, November 4, 2016

Getting closer; "Wells Fargo sales scandal extends to brokerage unit: US senators"

"Wells Fargo fired hundreds of brokerage employees for improper sales practices, three U.S. senators said on Thursday, widening the scope of a scandal which the fourth-largest U.S. bank has so far characterized as a retail banking problem.

In a letter to Wells Fargo Chief Executive Tim Sloan, Senators Elizabeth Warren, Ron Wyden and Robert Menendez questioned the bank's disclosures about those employees' dismissals in required regulatory filings.

The letter is the first indication that customers of the brokerage business, known as Wells Fargo Advisors, may also have been affected.

..."It would appear that Wells Fargo concealed key information from regulators that may have revealed the bank's misdeeds long before the September 2016 settlement," the senators wrote, requesting more information.

...The Financial Industry Regulatory Authority (FINRA), which regulates brokerages and securities dealers, told congressional staff that it had received dismissal documents known as Form U5s for more than 600 of those fired Wells Fargo employees. However, only 207 of them contained details indicating they were fired for practices that led to bogus accounts.

...Wells Fargo spokeswoman Jennifer Greeson Dunn said multiple investigations were underway, including an internal review.

...At a conference on Thursday, Sloan said he had no knowledge of issues outside the retail bank.

Wells Fargo's retail branches also include employees from other businesses who offer products besides bank accounts."
"The SEC often reviews whether public companies have failed to disclose issues that are material to shareholders, which typically encompasses information that could impact their investment decisions. Still, the SEC frequently decides against bringing enforcement cases based solely on this test.

“Materiality is what a reasonable investor would consider to be important as part of the overall info he or she looks at when making an investment decisions,” according to Jonathan Macey, a Yale Law School professor.

Lawmakers from both major parties have questioned whether Wells Fargo misled investors by failing to disclose the investigation that led to the September settlement. There have also been concerns raised about whether employees who reported wrongdoing through internal channels were mistreated.

Three Senate Democrats led by Elizabeth Warren of Massachusetts wrote to the SEC in September, asking the agency to investigate whether the bank violated whistleblower protection laws by firing employees after they tried to report misconduct. Democrats in the U.S. House of Representatives, including Gwen Moore of Wisconsin, have also said they’ve heard from whistleblowers in their districts who were pushed out after reporting misconduct."