US prosecutors investigating Wells Fargo's sales practices: Source

A customer enters a Wells Fargo & Co. bank branch in Hermosa Beach, California, US. US prosecutors have begun an investigation related to sales practices at Wells Fargo & Co.
A customer enters a Wells Fargo & Co. bank branch in Hermosa Beach, California, US. US prosecutors have begun an investigation related to sales practices at Wells Fargo & Co. PHOTO: BLOOMBERG

NEW YORK (REUTERS) - US prosecutors have begun an investigation related to sales practices at Wells Fargo & Co that led the bank to agree to a US$190 million (S$256 million) settlement with regulators, a person familiar with the matter said on Wednesday (Sept 14).

The US Attorneys' Offices in Manhattan and San Francisco are investigating Wells Fargo, the person said, following a settlement announced on Sept 8 over claims that some customers were pushed into fee-generating accounts they never requested.

Wells Fargo declined to comment on Wednesday. A spokesman for US Attorney's Office in Manhattan also declined to comment. The investigation was first reported by the Wall Street Journal.

The federal prosecutors' probes add a new headache for the company, which has been hit hard by allegations that its staff opened more than two million bank accounts and credit cards for customers without their consent to meet internal sales goals.

As part of last week's settlement, Wells Fargo agreed to pay US$185 million in penalties and US$5 million to customers. Wells Fargo also said that it had fired 5,300 employees over the sales conduct.

The bank neither admitted nor denied the allegations as part of the settlement.

On Tuesday, chief executive John Stumpf apologised and said the management takes responsibility for the problems identified in the settlement.

Although the bank eliminated sales goals for retail staff, Mr Stumpf said "cross-selling" products from various businesses to customers is still important to expand its business.