Wells Fargo has reached a $145 million settlement with the U.S. Department of Labor following an investigation into concerns over the the bank’s contributions to its 401(k) plan.
From 2013 through 2018, Wells Fargo overcharged 401(k) funds for company stock purchased for the plan, according to the Labor Department. The bank denied the allegations, and said it hasn’t conducted the transactions in question since 2018.
It’s the latest financial hit to the bank following a number of regulatory investigations into its activities.
Under the settlement announced Monday, Wells Fargo will pay approximately $131.8 million to eligible current and former 401(k) plan participants. The bank also agreed to pay a $13.2 million penalty.
“Our investigation found those responsible for Wells Fargo’s 401(k) plan paid more than fair market value for employer stock and, by doing so, betrayed the trust of the plan’s current and future retirees,” Labor Secretary Marty Walsh said in a news release.
The result, he said, was that retirement assets were “misused” and benefit plans suffered.
“The company strongly disagrees with the DOL’s allegations and believes it followed applicable laws in conducting the transactions,” the bank said in its news release. But it added that resolving the matter was “in the best interest of the company.”
As part of the settlement, the bank agreed to redeem certain preferred securities held by its 401(k) plan in exchange for shares of the company’s common stock.
In February, Wells Fargo disclosed in a securities filing that the Labor Department, along with other federal agencies, was looking into its 401(k) plan.
Wells Fargo is based in San Francisco but has its largest employment hub in Charlotte, with more than 27,000 workers here.
A series of concerns about Wells Fargo
Wells Fargo has faced a number of disputes with regulators and lawmakers in the last year, continuing a streak of negative publicity that has plagued the bank since its 2016 fake accounts scandal surfaced. In that case, bank employees created millions of accounts for customers without their knowledge.
In March, a Bloomberg investigation found that Wells Fargo approved fewer than half of Black homeowners’ mortgage refinancing applications in 2020, compared with 72% of white applicants. That led to 11 senators calling for a review of the bank’s mortgage refinancing processes.
U.S. Sen. Sherrod Brown, D-Ohio, decried the bank’s “history of consumer abuses and gross mismanagement” in public comments in May.
Brown’s criticism was spurred by a New York Times report stating the bank had a number of “fake” interviews with female applicants or job candidates of color. The bank revamped its hiring guidelines in response to the backlash.
That same month, the bank’s broker-dealer business, Wells Fargo Advisors, settled with the Securities and Exchange Commission for $7 million on charges related to anti-money laundering law violations.
And nearly a year ago, the bank was fined $250 million by the Office of the Comptroller of the Currency for failing to properly compensate customers affected by the bank’s prior “unsafe or unsound” home lending practices.
This story was originally published September 12, 2022 11:43 AM.
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