Wells Fargo Bank settled allegations that it overcharged its foreign exchange clients for years, agreeing to pay US$72.6 million in a deal with U.S. authorities.
The U.S. attorney’s office for the Southern District of New York announced a settlement with Wells Fargo to resolve a civil fraud lawsuit. The suit alleged the bank overcharged hundreds of commercial clients between 2010 and 2017 with excessive markups on FX transactions.
The misconduct was reported by a whistleblower, the government noted.
The settlement includes a US$37.3 million penalty and $35.3 million in client restitution.
According to court filings, the bank was found to be “surreptitiously and systematically charging significantly higher spreads and pocketing tens of millions of dollars in ill-gotten FX revenue.”
The government said that the firm’s FX salespeople were incentivized to overcharge customers, which “created an atmosphere in which employees openly joked about and celebrated taking advantage of the bank’s customers.”
It also said that the bank’s FX sales specialists would give false explanations to customers about inflated prices, including providing certain customers with false transaction data.
In the settlement, Wells Fargo acknowledged that it disciplined employees involved in the FX business and took other actions to comply with industry best practices.
In a statement on Tuesday, the firm said its “past behaviour was unacceptable.”
“Since that time, Wells Fargo has paid approximately $35 million to fully remediate affected clients and extensively reviewed our FX pricing practices and procedures. We have significantly improved our business policies, procedures and oversight related to the management and pricing of FX transactions. We remain committed to serving the needs of our FX clients,” it said.