SUMMARY
- Wells Fargo settles with $35 million over SEC allegations.
- Over 10,900 accounts faced overcharges surpassing $26.8 million.
- The bank's 'discount' promises weren't always delivered upon.
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Wells Fargo has found itself in a tight spot, and no, it's not because of a forgotten password or misplaced debit card. Instead, the bank is shelling out a cool $35 million, wrapping up allegations from the Securities and Exchange Commission (SEC). They believe Wells Fargo went a bit too wild with their charges, accumulating over $26.8 million in advisory fees from more than 10,900 accounts.
Here's where it gets interesting: some eagle-eyed financial advisors, playing by the rules, had given their clients a discount off the bank’s standard advisory fees. The evidence? Handwritten and typed amendments on the clients' investment advisory agreements. But, as luck would have it, the discounts sometimes remained mere ink on paper, not always translating to actual reductions. A classic case of "promised you a discount, forgot to apply it".
While Wells Fargo didn't exactly raise a white flag, they didn't refute the allegations either. They're on the fence. But they're definitely glad to see the end of this episode. Caroline Szyperski, representing Wells Fargo, highlighted that the glitchy process responsible for this was fixed ages ago. Moreover, in a nod to good faith, the bank did a deep dive into its accounts, ensuring all affected customers were reimbursed.
This isn't some new stunt Wells Fargo pulled off either. The SEC pointed out that between 2002 and 2014, the bank and its predecessor companies sometimes agreed to cut fees for advisory clients. However, these benevolent gestures didn't always come to fruition. Last year marked the end of these overcharges. By June, Wells Fargo had returned a whopping $39 million, including interest, to the accounts that were overbilled.
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