The Securities and Exchange Commission (SEC) announced on Friday that Wells Fargo & Co. has agreed to pay a $35 million civil penalty to settle claims regarding overcharging on thousands of its investment advisory accounts. Wells Fargo’s subsidiaries, Wells Fargo Clearing Services LLC and Wells Fargo Advisors Financial Network LLC, were found to have imposed excessive fees totaling $26.8 million on over 10,900 investment advisory accounts prior to 2014.
According to the SEC, the bank’s account processing employees failed to input the agreed-upon reduced advisory fee rates into the billing systems when setting up clients’ accounts. This occurred after financial advisers made handwritten or typed changes on investment advisory agreements with individual clients. The SEC stressed the importance of firms prioritizing client protection as they expand through acquisitions.
In addition to the civil penalty, Wells Fargo has also reimbursed the affected accountholders with a payment amounting to $40 million, as reported by the SEC. Following this news, Wells Fargo stock experienced a 1.5% decrease, while the S&P 500 dipped by 0.4%.