Wells Fargo and its subsidiary Wells Fargo Bank have agreed to pay a penalty of $3bn to settle a probe into its fake-account creation scandal.
The bank will pay the fines to the US Justice Department (DOJ) and Securities and Exchange Commission (SEC).
The DOJ had accused the banking major of pressuring employees during for achieving unrealistic sales goals.
Thousands of employees indulged in offering millions of accounts or products under false pretences or without consent to customers to meet their set targets, DOJ alleged.
It was alleged that the offers were often made by generating false records or misusing identities of customers.
According to the department, Wells Fargo admitted to having collected millions of dollars in fees and interest to which it was not entitled.
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By GlobalDataIt was also alleged that the bank unlawfully misused the sensitive personal information of customers, including their means of identification.
DOJ Civil Division Deputy Assistant Attorney General Michael Granston said: “When companies cheat to compete, they harm customers and other competitors.
“This settlement holds Wells Fargo accountable for tolerating fraudulent conduct that is remarkable both for its duration and scope and for its blatant disregard of customer’s private information.
“The Civil Division will continue to use all available tools to protect the American public from fraud and abuse, including misconduct by or against their financial institutions,” the statement read.
The $3bn fine to be paid by Wells Fargo includes the $500m penalty as ordered by the SEC to settle charges of misleading its investors about the success of the “cross-sell” strategy of its community bank business unit.
The bank was charged by the regulator of opening fake accounts for unaware customers and selling unnecessary products that were not unused.
The SEC noted that the penalty amount will be distributed among the impacted investors.
Commenting on the settlement, Wells Fargo CEO Charlie Scharf said: “The conduct at the core of today’s settlements — and the past culture that gave rise to it — are reprehensible and wholly inconsistent with the values on which Wells Fargo was built.
“Our customers, shareholders and employees deserved more from the leadership of this Company. Over the past three years, we’ve made fundamental changes to our business model, compensation programs, leadership and governance.”
Recently, reports emerged that Wells Fargo is planning to eliminate close to 700 jobs in Manila, the Philippines in tech overhaul.
The bank plans to move a portion of these jobs to India where almost 12,000 tech employees are already working, a bank’s spokesman Peter Gilchrist told Bloomberg.
In November last year, Wells Fargo was ordered to pay $200m in damages after it was found guilty of infringing United Services Automobile Association (USAA) patents.
