Wells Fargo has agreed to a settlement with the U.S. Securities and Exchange Commission (SEC) regarding excessive fees charged to certain account holders. As part of the settlement, Wells Fargo will pay $35 million in civil penalties and reimburse approximately $40 million, including interest, to the affected customers.
An investigation by the SEC found that Wells Fargo’s financial advisors overcharged more than 10,900 investment advisory accounts by a total of over $26.8 million in advisory fees. The overcharging occurred because agreed-upon reduced fees for specific clients were not accurately recorded within the firm’s billing systems. The affected clients had opened accounts before 2014 and maintained them through the end of 2022.
Gurbir Grewal, Director of the SEC’s Enforcement Division, commented on the matter, stating, “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.”
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As part of the settlement, Wells Fargo will pay a $35 million civil penalty to the SEC without admitting or denying the allegations. The firm will also reimburse affected customers over $26.8 million in excessive fees, along with interest.
Some financial advisors from Wells Fargo, as well as those from predecessor firms due to mergers, had agreed to reduce standard advisory fees for clients when they opened their accounts. However, internal systems shortcomings prevented the accurate implementation of these reduced fees in some cases, resulting in the overcharging of a significant number of accounts.
Caroline Szyperski, spokesperson for Wells Fargo, expressed the firm’s satisfaction in reaching a resolution for the matter. She noted that the process that caused this issue was corrected nearly a decade ago, and Wells Fargo Advisors have thoroughly reviewed the affected accounts and fully reimbursed impacted customers.
The settlement highlights Wells Fargo’s commitment to transparency, accountability, and customer service. The bank and its predecessor firms are dedicated to preventing similar incidents through improved policies and procedures, ensuring the accurate implementation of negotiated advisory fees.
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