Feds broaden investigation of Wells Fargo Advisors: WSJ

FBI agents have interviewed some wealth-management employees.

A federal investigation into sales practices at Wells Fargo & Co. now includes the bank’s wealth management business, extending the probe beyond the firm’s retail-banking unit where the problems originated, according to a report Friday from the Wall Street Journal.

The Justice Department and Securities and Exchange Commission are conducting the investigation into the wealth management business, according to the report by the Journal, which cited unnamed people familiar with the matter. Agents from the FBI have been interviewing some wealth-management employees in the Phoenix area as recently as this week, according to the report.

Wells Fargo Advisors has been facing scrutiny since the start of the month. That’s when, in a filing with the SEC, Wells Fargo revealed that the Department of Justice had instructed the bank to conduct an independent investigation of its Wealth and Investment Management business, which includes Wells Fargo Advisors.

Wells Fargo said in the filing that its review was in its preliminary stages.

“A review of certain activities within Wealth and Investment Management (WIM) being conducted by the Board, in response to inquiries from federal government agencies, is assessing whether there have been inappropriate referrals or recommendations, including with respect to rollovers for 401(k) plan participants, certain alternative investments, or referrals of brokerage customers to the Company’s investment and fiduciary services business,” according to the filing.

Last week, Massachusetts Secretary of the Commonwealth William Galvin also opened an investigation of Wells Fargo Advisors, targeting whether the firm inappropriately moved investors into higher-fee accounts.

A scandal in Wells Fargo’s retail banking unit that came to light in September 2016 resulted in the company being fined $185 million for opening banking accounts for a few million customers without their knowledge or approval.

The bank also was scrutinized last year for its auto-loan practices, which led to hundreds of thousands of clients who had taken out car loans being charged for insurance they didn’t need.

“Our top priority is to rebuild trust with all of our stakeholders,” Wells Fargo said in a statement to InvestmentNews. “The disclosures in the [March 1 SEC] filing reflect our continued commitment to transparency, even when all of the information or the final outcome of a matter may not be known just yet.”

To read the story in the Wall Street Journal, click here.