Wells Fargo under fire again, for Tennessee pension fund snafu
Just as Wells Fargo tries to repair its image with a new “Re-Established” campaign in the wake of numerous improprieties, the bank is admitting it kept rebates that should have been deposited in a Tennessee public pension fund.
Wells Fargo, the trustee of the Chattanooga Fire & Police Pension Fund, took $47,000 in fee rebates that should have been passed on to the pension fund, as first reported by The Wall Street Journal. The fund has 1,600 members and $215 million.
As trustee, under a system known as revenue sharing, Wells Fargo received the fee rebates from third-party fund companies because of investments it held for clients. The bank was then expected to return the rebates to those clients.
In a statement, Wells Fargo acknowledged that it “made an error in setting up the revenue sharing” and “the revenue share rebates did not occur as intended.”
The bank, which apologized for the mistake, recently returned $15,000 to the fund, which is the amount it said was owed.
The Chattanooga Fire & Police Pension Fund filed complaints with the Securities and Exchange Commission and the state of Tennessee, asking the latter to look into Wells Fargo’s accounting practices, The Journal reported.
Wells Fargo said it was “disappointed” by the complaint because it has already provided that information.
The pension fund, however, voiced concern that other accounts may have been “similarly harmed” by Wells Fargo, it told The Journal.
The Chattanooga Fire & Police Pension Fund did not return FOX Business’ request for comment at the time of publication.
Wells Fargo is still reeling from a slew of recent scandals. The U.S. Labor Department is reportedly looking into whether Wells Fargo pressured participants in lower-cost corporate 401(k) accounts to roll their savings into more expensive IRA plans when they retire or leave their jobs, according to reports released last month. Investigators are also examining whether the bank encouraged savers to purchase in-house funds that would have increased its own revenue.
Meanwhile, last month, the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency announced that Wells Fargo had agreed to pay a $1 billion fine as part of a settlement after the bank forced an auto loan insurance program onto hundreds of thousands of consumers that did not need it and mischarged consumers for certain mortgage interest rate lock extension products.
Of those who were forcibly sold the auto loan insurance product, thousands had their cars repossessed because they could not afford the extra payments, the bank admitted.
Wells Fargo said the hefty fine, one of the largest levied on any bank unrelated to the financial crisis, will cut about $800 million off of its first-quarter profit.
The troubled bank also agreed to pay a $185 million fine in 2016 after it was revealed that employees were creating fraudulent accounts for customers without their approval.
Despite a slew of missteps, legendary investor Warren Buffett told FOX Business’ Liz Claman over the weekend that the bank has a “great future” and that “someone made a terrible mistake” by allowing the creation of sham customer accounts.
Shares of Wells Fargo were trading 1% higher Thursday.