Wells Fargo to pay $35 million penalty to settle charges of overcharging advisory fees

Wells Fargo has agreed to pay a $35 million civil penalty to settle charges of overcharging more than 10,900 customers for advisory fees.

Financial advisers from Wells Fargo and its earlier firms made handwritten or typed changes on clients’ advisory agreements to show reduced fees when their investment accounts were opened, the Securities and Exchange Commission said in a recent news release. But employees failed to honor the agreements by not setting them up in the billing system after negotiations, according to the SEC.

Certain customers who opened accounts before 2014 though the end of December 2022 were overcharged for advisory fees, which totaled more $27 million, the SEC stated.

Wells Fargo is based in San Francisco but has its largest employment base in Charlotte, with about 27,000 workers here. The penalty is the latest in a series of fines, penalties and settlements that the beleaguered bank has faced in recent years.

“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,” Gurbir Grewal, director of the SEC’s Enforcement Division, stated in the news release. “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.”

SEC Investigators also said Wells Fargo failed to have written compliance policies and procedures to determine if billing systems had accurate data to prevent overbilling.

Wells Fargo paid $40 million, including interest, to compensate account holders overcharged by advisers.

According to the news release, the bank also agreed to pay a $35 million penalty and didn’t admit or deny the SEC charges, but consented to findings about the firm violating sections of an investment advisers act, and agreed to a cease-and-desist order and censure.

Other Wells Fargo penalties

The SEC announcement is one of several financial scandals involving Wells Fargo,

The bank has faced a series of regulatory sanctions since its 2016 fake accounts scandal, when it was discovered hundreds of thousands of Wells Fargo workers opened millions of accounts for customers without their permission in order to meet sales goals for over a decade.

Wells Fargo reached a deal with the feds and agreed to pay a $3 billion settlement, and later another $1 billion to shareholders.

In December 2020, the company also agreed to pay $3.7 billion in fines and restitution because of what the Consumer Financial Protection Bureau called “widespread mismanagement” problems involving auto lending, mortgages, and consumer deposit accounts.

And following an investigation, a $145 million settlement was reached last September after the U.S. Labor Department looked into concerns about Wells Fargo’s contributions to its 401 (k) plan.