Wells Fargo has agreed to a $72.6M settlement for overcharging and misleading bank customers about foreign exchange fees from 2010 to 2017. About half of the settlement ($35.3M) will be paid directly to the 771 customers affected by the fraud, and approximately $37.3M will be paid to the United States as civil penalties for violating financial regulations, according to the U.S. Attorney’s Office for the Southern District of New York.
The whistleblower, former Wells Fargo foreign exchange trader, Paul Kohn, who kicked off the case in 2016 is set to receive $1.6M from proceeds going to the government.
Wells Fargo told the commercial customers they were being charged certain fixed rates, but then incentivized salespeople to “overcharge FX customers,” according to the lawsuit. The bank then concealed the overcharges and gave “false explanations” for the inflated prices, the government said.
“We all put trust in our banking institutions to deal with us honestly, fairly and transparently when we are their customers. For the better part of a decade, Wells Fargo abused this trust, using tricks, false information and other deceptive practices to fraudulently overcharge customers who used the Bank’s foreign exchange service,” U.S. Attorney Audrey Strauss said.
Wells Fargo has been dealing with regulatory matters under CEO Charles Scharf, who was hired in 2019 to clean up the bank’s legal issues that started with the 2016 fake accounts scandal. Earlier this month, Wells Fargo was fined $250M on the same day it announced the resolution of a Consumer Financial Protection Bureau consent order. Wells Fargo issued a statement early Tuesday, calling the behavior in the currency case “unacceptable.”
“We have significantly improved our business policies, procedures and oversight related to the management and pricing of FX transactions,” a spokeswoman said. “We remain committed to serving the needs of our FX clients.”
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