Wells Fargo reached a $37.3 million settlement with the Justice Department over accusations that it overcharged hundreds of customers who used its foreign exchange services.
The complaint and settlement agreement filed on Monday in the U.S. District Court in Manhattan alleges that Wells Fargo defrauded nearly 800 commercial customers from 2010-2017, according to Bloomberg. Among the clients involved were small- and mid-size banks and businesses, according to the DOJ.
The lawsuit accused the country’s fourth-largest bank of “brazen and wide-ranging fraud.” Shares of Wells Fargo tumbled nearly 4% upon the news before regaining some losses to close down at less than 1%.
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In the lawsuit, prosecutors contend some foreign exchange employees took home bonuses in excess of $1 million.
“As a result of the improper incentives and lack of oversight, a culture developed in which Wells Fargo FX sales specialists were comfortable repeatedly defrauding the bank’s customers,” the complaint read. “FX sales specialists openly discussed and even celebrated transactions resulting in larger FX spreads than agreed to with customers and transactions generating large FX revenue.”
Wells Fargo executives, led by CEO Charles Scharf, have been working to pull the bank from a mire of scandals dating back years. Earlier this month, the bank was slapped with a $250 million fine for mishandling oversight of home mortgages.
Sen. Elizabeth Warren, a Massachusetts Democrat critical of big banks, recently called upon Federal Reserve Chairman Jerome Powell to break up Wells Fargo. She branded the bank as “simply ungovernable” in a letter to Powell.
Warren highlighted a scandal in which employees secretly created millions of bank and credit card accounts unbeknownst to the customers involved. Wells Fargo ended up firing thousands of employees during the fallout and reached a $3 billion settlement with the DOJ over the matter.
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The Washington Examiner contacted Wells Fargo for comment about Monday’s settlement but did not immediately receive a response.
