Minnesota to get $9.3M from Wells Fargo in fake-account settlement

Wells Fargo & Co. agreed to pay $575 million to settle claims made by U.S. states from the sales-practices scandal that unfolded in 2016, the company and states said Friday.

The move is the latest settlement as the nation's third-largest bank seeks to resolve lingering investigations from the scandal, which led to an overhaul of its leadership, restructuring of operations, a punitive cap on its assets and over $2 billion in penalties.

Minnesota will receive $9.3 million from Wells Fargo in the settlement, which resolves claims by all 50 states and the District of Columbia related to phony customer accounts and improper charges to customers for financial products like auto and life insurance. Employees of the San Francisco-based company said they felt pressured to perform the fraudulent actions due to the company's aggressive sales goals.

"This settlement — on top of other settlements by federal regulators — is aimed to bring some measure of accountability to practices that are unacceptable for a banking institution," Minnesota Attorney General Lori Swanson said in a statement Friday.

The payment will go into Minnesota's general fund, said Ben Wogsland, spokesman for the attorney general.

This isn't the bank's first settlement related to the scandal. Wells Fargo agreed in April to pay more than $1 billion in civil penalties to the federal government's Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau. Additionally, the company has agreed to pay more than $600 million in restitution to consumers negatively affected by the fraudulent activities.

Recent penalties for Wells Fargo

April 2018: $1 billion penalty by Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency related to auto loans

Aug. 2018: $2.1 billion penalty by U.S. Department of Justice for toxic mortgages before 2008 crisis

Oct. 2018: $65 million penalty in New York state on cross-selling practices

Dec. 2018: $480 million settlement of class-action suit by investors

Dec. 2018: $575 million settlement with 50 states and Washington, D.C., for sales practices

And just earlier this month, Wells Fargo shareholders won a class-action lawsuit against the company to the tune of $480 million for losses suffered when news of the scandal drove down its stock price.

In February, the Federal Reserve Board imposed unprecedented sanctions against Wells Fargo, forbidding it from growing beyond its total asset size at the end of 2017 until it "sufficiently improves its governance and controls." The Fed required Wells Fargo to replace four of its board members by the end of this year.

Friday's settlement also states Wells Fargo will create a dedicated website and phone number to manage and review complaints from consumers who believe they have not been fully compensated under the previous agreements.

"This agreement underscores our serious commitment to making things right in regard to past issues as we work to build a better bank," Wells Fargo chief executive Tim Sloan said.

Sloan apologized for the phony accounts and other practices during a congressional hearing in 2017, but the company remained under pressure from the weight of all the scandals. The company has announced plans to lay off up to 10 percent of its workforce over the next three years.

California, the bank's home state, will get more than a quarter of the settlement funds because of the number of Wells Fargo customers residing there.

California Attorney General Xavier Becerra called the bank's behavior "disgraceful."

"Wells Fargo customers entrusted their bank with their livelihood, their dreams, and their savings for the future," said Becerra. "Instead of safeguarding its customers, Wells Fargo exploited them, signing them up for products — from bank accounts to insurance — that they never wanted. This is an incredible breach of trust that threatens not only the customers who depended on Wells Fargo, but confidence in our banking system."

Wells Fargo still faces probes by the U.S. Securities and Exchange Commission, the Department of Justice and the Department of Labor, according to its most recent securities filing.