Wells Fargo agreed to resolve the legacy matter “in the best interest of the company”. Credit: Laimerpramer/commons.wikimedia.org.

Wells Fargo has reached an agreement with the US Department of Labor (DOL) to settle an issue regarding 401(k) retirement plan.    

Under the terms of the agreement, the company will pay over $13.2m to the DOL and nearly $131.8m to current and former 401(k) Plan participants.

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Wells Fargo gives its employees some of its preferred stock as part of a retirement package.

The development follows an investigation by DOL that claimed that from 2013 through 2018, “the fund overpaid for company stock purchased for the plan”.  

The company also agreed to redeem the remaining preferred stock held by its 401(k) Plan in return to shares of the company’s common stock.

Disagreeing with DOL’s charges, Wells Fargo, in a statement said it followed stipulated laws while making the transactions.

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However, it is resolving the legacy matter as it “is in the best interest of the company”.

According to the company, all 401(k) Plan participants received necessary matching and profit-sharing contributions.

It added that an independent third-party that permitted the transactions on behalf of the 401(k) Plan confirmed that the 401(k) Plan did not pay more than fair market value for the company stock.

Since the past few years, Wells Fargo has faced several regulatory crackdowns.

In 2020, Wells Fargo and its subsidiary Wells Fargo Bank agreed to pay $3bn to resolve a criminal and civil investigation.

The probe was in connection to an alleged sales practices involving the opening of millions of accounts without customer authorisation. As per the US Department of Justice, Wells Fargo was charged with creating false records and misusing customers’ identities.