Consumer Fraud

Wells Fargo Says Unauthorized Accounts Scandal May Be Much Larger

Wells Fargo fraud Wells Fargo Says Unauthorized Accounts Scandal May Be Much LargerWells Fargo warned in an Aug. 4 filing with the U.S. Securities and Exchange Commission (SEC) that it expects to find a “significant increase” in the number of unauthorized deposit and credit card accounts it opened for customers.

“We expect that our review of the expanded time periods … may lead to a significant increase in the identified number of potentially unauthorized accounts,” Wells Fargo said in its SEC filing, according to CNBC. The bank added it does “not expect any incremental customer remediation costs as a result of these efforts to have a significant financial impact on the Company.”

That little reassurance may have done little to comfort investors, however. Shares of the bank’s stock had already plummeted more than 2.5 percent after The New York Times reported that it enrolled and charged more than 800,000 auto loan customers for unauthorized auto insurance policies.

Recent news that Wells Fargo agreed to pay $108 million to settle a whistleblower case alleging it defrauded veterans buying homes did little to restore the trust of customers and investors.

The continual chain of scandals has kept Wells Fargo as an underperformer this year, with shares falling more than 4 percent year to date.

Feeling the heat from its investors, customers, and government regulators, the bank vowed to disclose all outstanding legal matters in its quarterly regulatory filings, CNBC reported, citing investment banking firm Evercore ISI.

“ … As Wells Fargo tries to improve its transparency, it has adopted a policy whereby it will disclose all outstanding legal matters (and not just updates) in its 10Q filings, going fwd,” Evercore ISI analyst John Pancari wrote in a note to clients Sunday, according to CNBC. “Visibility into the regulatory and legal issues at Wells remains limited, and earnings momentum appears to be suffering,” he added.

Months ago, lawyers warned it was likely the Wells Fargo sham-account scandal was significantly larger than the bank let on. According to papers filed May 11 in federal court in San Francisco, plaintiffs’ lawyers said the number of accounts Wells Fargo opened without customers’ knowledge or consent is was more like 3.5 million rather than the 2.1 million the bank estimated.