Wells Fargo Accused of ERISA Violations

By:
Chris Gaetano
Published Date:
Apr 30, 2018
Wells Fargo

Embattled bank Wells Fargo, which has recently been involved in a series of scandals, has now been accused of violating the Employee Retirement Income Security Act by inappropriately pushing clients to roll their 401(k) plans into a more expensive IRAs regardless of suitability, according to the Wall Street Journal. The Department of Labor, which is investigating the bank, says that Wells Fargo managers pressed its workers in the bank's retirement division to recommend that clients open a more expensive IRA as part of asset retention goals meant to keep retirement accounts in-house. The bank is also accused of directing retirees to buy in-house funds regardless of whether such funds would be best for them. Under federal law, Wells Fargo must follow a fiduciary standard when dealing with retirement assets. The Wall Street Journal said the investigation emerged from a whistleblower saying that the bank was violating that standard by making inappropriate recommendations that were more expensive to clients but generated better revenue for the bank. 

This is the latest in a very long series of regulatory actions that have bedeviled Wells Fargo since it was revealed it had opened millions of potentially fraudulent accounts without customer knowledge or consent. It was also found to have been overcharging foreign exchange customers in order to meet bonus incentives, overcharging small businesses for credit card processing, automatically signing up customers taking out an auto loan for car insurance, even if they didn't need it, and making mortgage loan modifications without the borrower's knowledge or consent.

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