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What's up with Wells Fargo?
October 6, 2014
by Brian Wolf

I usually don't write columns on specific insurance companies or investment companies because, to be honest with you, they all seem to have legal departments that need to work overtime. I seriously doubt that there's any large financial services company that hasn't been sued multiple times for one thing or another. And of course, it's important to remember that just because someone is being sued doesn't mean they are guilty of anything. It's that old "innocent until proven guilty" thing.

However, when I read a recent article in investment news about Wells Fargo, I couldn't help but wonder; will they ever steer clear of all the lawsuits?

A quick google search turned up 1,650,000 results! Here are just a couple to consider.

Investment News 2014: Wells Fargo risks Finra action

Wells Fargo Advisors has been warned that it is facing possible Finra action for alleged failures in its anti-money-laundering policies, according to a disclosure posted to the company's public broker check profile.

Wall Street Journal 2012:

US Sues Wells Fargo for Faulty Mortgages

The government sued Wells Fargo & Co., accusing the biggest US mortgage lender of "reckless" lending and leaving a federal insurance program to pick up the tab.

In the suit against Wells Fargo, prosecutors said they were seeking "hundreds of millions of dollars" in damages on behalf of the FHA, a government agency that doesn't make loans, but insures those made by lenders that meet its standards.

This suit is the third federal mortgage-related case this year for Wells Fargo.

"As the complaint alleges, yet another major bank has engaged in a long-standing and reckless trifecta of deficient training, deficient underwriting, and deficient disclosure, all while relying on the convenient backstop of government insurance," said Preet Bharara, the US attorney for the Southern District of New York, in a statement.

In July, Wells Fargo agreed to pay at least $175 million to settle allegations that the company discriminated against black and Hispanic borrowers. In February, Wells Fargo and four other large US banks agreed to a $25 billion settlement involving alleged foreclosure abuses. In a July 2011 settlement with the Federal Reserve Board, the San Francisco-based lender agreed to pay an $85 million civil penalty in response to allegations that it steered borrowers into high-cost subprime loans. Wells didn't admit wrongdoing in the settlements.

Huffington Post 2012:

Wells Fargo Lawsuit Alleges Bank Fired Him, Cut Dying Daughter's Health Insurance

Wells Fargo allegedly fired an employee because his dying daughter needed expensive cancer treatment, according to a lawsuit filed in Palm Beach County Court Thursday.

Wells Fargo fired mortgage consultant Yovany Gonzalez three days before his daughter Mackenzie was scheduled to get cancer surgery in August of 2010, the lawsuit states. According to the suit, the hospital canceled the surgery because Mackenzie no longer was covered by health insurance. She died of cancer in March of 2011.

Wells Fargo, for its part, is defending itself against the allegations. "While we're very sympathetic to Mr. Gonzalez for his personal loss, his termination was unrelated to the allegations included in the lawsuit," said Bridget Braxton, a spokesperson for Wells Fargo, in a statement.

Truthout 2014:

New Lawsuit Alleges That Wells Fargo Has a Manual

for Mass Fabrication of Foreclosure Documents

Catherine Curan of the New York Post has an important story on a federal lawsuit that looks to have unearthed a smoking gun about systematic document fabrication at Wells Fargo.

Associated Press 2014:

Wells Fargo Pays $290,000 in Sex Harassment Case

Wells Fargo Bank has agreed to pay $290,000 to four tellers in Nevada to settle a same-sex sexual harassment case brought by the US Equal Employment Opportunity Commission.

The lawsuit filed last year in US District Court in Reno, accused a female manager and female teller at a Reno bank branch of subjecting the four women to a sexually-hostile work environment dating to December 2010.

Reuters 2014:

Wells Fargo to pay $62.5 million to settle securities lending lawsuit

Wells Fargo & Co. has agreed to pay $62.5 million to settle claims from a group of institutional investors that the bank improperly advertised a risky securities lending program as safe.

Approximately 100 investors, led by the City of Farmington Hills Employees Retirement System pension plan, have asked US District Judge Donovan Frank in St. Paul, Minnesota, for preliminary approval of the deal, which would resolve a 2010 class action.

The plaintiffs argued that the bank marketed its lending program as safe, but instead invested their funds in risky products such as mortgage-backed securities, causing significant losses.

I'm not sure what it really means when you google Wells Fargo lawsuits and you have 1,650,000 results, but needless to say, it should raise an eyebrow or two. In today's world, trust has never been more important and trusting your financial advisor or financial institution has never been more critical.



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