Timeline: Wells Fargo's Biggest Legal Settlements

Latest adds to almost $10 billion paid over the past seven years to regulators and stakeholders

Wells Fargo Agreed Would Pay To Settle With A U.S. Consumer Finance Watchdog

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Wells Fargo's (WFC) latest settlement will cost it $1 billion. Controversies have cost the bank almost 10 times that amount in the past decade.

The lender agreed on Tuesday to pay shareholders $1 billion in damages to settle a class-action lawsuit in which plaintiffs alleged the company misled regulators and overstated its progress in addressing the issues that led up to the 2016 fake accounts scandal. Wells Fargo has been embroiled in controversy that cost it billions of dollars and a number of executives their jobs after the scandal came to light almost seven years ago.

A Timeline of Controversy

The fake accounts hit the finances of millions of customers and damaged the bank’s reputation. However, it wasn’t the only instance of malpractice. Below is a timeline of settlements including several other scandals:

  • December 2022: Wells Fargo paid more than $2 billion to consumers and $1.7 billion in civil penalties after the Consumer Financial Protection Bureau (CFPB) found mismanagement—including illegal fees and interest charges—in several of its biggest product lines, such as auto loans, mortgages, and deposit accounts.
  • February 2020: Wells Fargo paid $3 billion to settle criminal and civil investigations by the Justice Department and Securities and Exchange Commission (SEC) into its aggressive sales practices between 2002 and 2016. About $500 million was eventually distributed to investors.
  • January 2020: The Office of the Comptroller of the Currency (OCC) banned two senior executives at Wells Fargo, former CEO John Stumpf and ex-Head of Community Bank Carrie Tolstedt, from the banking industry. Stumpf and Tolstedt also incurred civil penalties of $17.5 million and $17 million, respectively.
  • 2019: After what is considered a "rare public rebuke" by the OCC, Timothy Sloan resigned as the bank's CEO, the second chief executive to resign in three years. Charles Scharf took over, but other executives continued to depart the lender.
  • August 2018: The Justice Department levied a $2.1 billion fine on Wells Fargo for its actions during the subprime mortgage crisis, particularly its mortgage lending practices between 2005 and 2007.
  • April 2018: Federal regulators at the CFPB and OCC examined Wells Fargo's auto loan insurance and mortgage lending practices and ordered the bank to pay $1 billion in damages.
  • February 2018: In response to widespread mistreatment of customers and compliance breakdowns, the Federal Reserve ordered the lender to replace three directors and restricted its growth until it could see a meaningful improvement in governance and controls.
  • October 2017: Wells Fargo admitted wrongdoing after 110,000 clients were mistakenly fined for missing a deadline on mortgage payments, even though the bank was ultimately at fault for the delays.
  • July 2017: As many as 570,000 Wells Fargo customers were wrongly charged for auto insurance on car loans after the bank failed to verify whether those customers already had existing insurance. As a result, up to 20,000 customers may have defaulted on car loans.
  • April 2017: In its 2017 Sales Practices Investigation Report (SPIR), Wells Fargo's board identified "cultural, structural, and leadership issues" as the root causes of improper sales activity at the company and revealed that the bank's executives were aware of the issues and practices underpinning the fake accounts scandal as far back as 2002.
  • March 2017: After discovering illegal and discriminatory credit practices, including the creation of millions of fraudulent accounts, the OCC downgraded Wells Fargo’s rating under the Community Reinvestment Act (CRA) to "needs to improve" from "outstanding."
  • October 2016: Facing mounting criticism, Wells Fargo CEO John Stumpf retired, surrendering $69 million in compensation through forfeiture and clawbacks.
  • September 2016: Wells Fargo acknowledged it had created 1.5 million fake deposit accounts and 623,000 fake credit card accounts between 2002 and 2016 in customers’ names without their knowledge and approval, motivated by unrealistic profit goals set by company leadership. As a result, the lender was forced to pay $185 million in damages to the CFPB, OCC, and City and County of Los Angeles, in what became one of the biggest scandals in the company's 170-year history.

Wells Fargo shares fell 1% yesterday. They're down 7% year-to-date, roughly matching the performance of the broader financial sector over the same period.

WFC Shares YTD


Article Sources
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  1. New York Times. "Wells Fargo to Pay $1 Billion to Settle Lawsuit by Shareholders."

  2. Congressional Research Service. "Wells Fargo—A Timeline of Recent Consumer Protection and Corporate Governance Scandals."

  3. Consumer Financial Protection Bureau. "CFPB Orders Wells Fargo to Pay $3.7 Billion for Widespread Mismanagement of Auto Loans, Mortgages, and Deposit Accounts."

  4. U.S. Department of Justice. "Wells Fargo Agrees to Pay $3 Billion to Resolve Criminal and Civil Investigations into Sales Practices Involving the Opening of Millions of Accounts without Customer Authorization."

  5. Office of the Comptroller of the Currency. "OCC Issues Notice of Charges Against Five Former Senior Wells Fargo Bank Executives, Announces Settlement With Others."

  6. Office of the Comptroller of the Currency. "OCC Issues Prohibition Order, Fines Former Wells Fargo Executive $17 Million in Settlement."

  7. Federal Reserve Board. "Press Release: February 02, 2018."

  8. https://newsroom.wf.com/English/news-releases/news-release-details/2017/Wells-Fargo-Board-Releases-Findings-of-Independent-Investigation-of-Retail-Banking-Sales-Practices-and-Related-Matters/default.aspx

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