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Wells Frago's (WFC) 2016 Consent Order Terminated by OCC
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Wells Fargo & Company (WFC - Free Report) has crossed a major regulatory hurdle with the termination of the consent order by Office of Comptroller of Currency (OCC). The order was issued back in September 2016 on revelation of opening of millions of unauthorized accounts leading to misconduct in the company’s sales practices.
The consent order required WFC to revamp the procedures followed by the bank in offering and selling its products and services to customers. As the bank has been complying with laws and regulations, and implementing changes as required under the supervision of its chief executive officer, Charlie Scharf, the need for a consent order to be in force was no longer required.
Scharf stated, “I have repeatedly said that implementing a risk and control framework appropriate for a bank of our size and complexity is our top priority, and closing consent orders is an important sign of our progress. This is the sixth consent order that our regulators have terminated since 2019.”
He further added, “Confirmation from the OCC that we have effectively implemented what was required is a result of the hard work of so many of our employees, and I’d like to thank everyone at Wells Fargo involved for their dedication to transforming how we do business. We are a stronger, better Wells Fargo for our customers and communities, and we will not lose sight of the remaining work to do.”
Followed by the imposition of the consent order in 2016 and various other penalties and sanctions, Federal Reserve inflicted a cap on Wells Fargo’s asset size. Such regulatory restrictions along with a long list of pending legal cases keep the bank under close supervision of regulatory authorities.
In September 2021, the bank was levied with restrictions on acquiring certain residential mortgage servicing and a $250-million penalty due to its inefficient home-lending loss mitigation program. In February 2020, the bank entered a $3-billion settlement with the authorities investigating its Community Bank sales practices.
Over the past six months, shares of WFC have gained 22.5% compared with the industry’s growth of 20%.
Earlier this month, HSBC Holdings plc (HSBC - Free Report) was fined £57.4 million by Bank of England (“BoE”) for “serious failings” over its measures to protect customer deposits between 2015 and 2022. The fine is the second-biggest fine ever imposed by the regulator, which reflects the seriousness of the failings.
BoE’s Prudential Regulation Authority said that HSBC failed to accurately identify deposits eligible for Britain’s Financial Services Compensation Scheme, which protects up to £85,000 in customer bank accounts.
The Goldman Sachs Group, Inc. (GS - Free Report) was investigated for fees that it charged for futures trading. The investigation was carried out following a whistle-blower tip. The news was first reported by Bloomberg, citing people with knowledge of the matter.
Commodity Futures Trading Commission privately authorized sending warrants to GS to receive information about fees charged for some futures block trades.
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Wells Frago's (WFC) 2016 Consent Order Terminated by OCC
Wells Fargo & Company (WFC - Free Report) has crossed a major regulatory hurdle with the termination of the consent order by Office of Comptroller of Currency (OCC). The order was issued back in September 2016 on revelation of opening of millions of unauthorized accounts leading to misconduct in the company’s sales practices.
The consent order required WFC to revamp the procedures followed by the bank in offering and selling its products and services to customers. As the bank has been complying with laws and regulations, and implementing changes as required under the supervision of its chief executive officer, Charlie Scharf, the need for a consent order to be in force was no longer required.
Scharf stated, “I have repeatedly said that implementing a risk and control framework appropriate for a bank of our size and complexity is our top priority, and closing consent orders is an important sign of our progress. This is the sixth consent order that our regulators have terminated since 2019.”
He further added, “Confirmation from the OCC that we have effectively implemented what was required is a result of the hard work of so many of our employees, and I’d like to thank everyone at Wells Fargo involved for their dedication to transforming how we do business. We are a stronger, better Wells Fargo for our customers and communities, and we will not lose sight of the remaining work to do.”
Followed by the imposition of the consent order in 2016 and various other penalties and sanctions, Federal Reserve inflicted a cap on Wells Fargo’s asset size. Such regulatory restrictions along with a long list of pending legal cases keep the bank under close supervision of regulatory authorities.
In September 2021, the bank was levied with restrictions on acquiring certain residential mortgage servicing and a $250-million penalty due to its inefficient home-lending loss mitigation program. In February 2020, the bank entered a $3-billion settlement with the authorities investigating its Community Bank sales practices.
Over the past six months, shares of WFC have gained 22.5% compared with the industry’s growth of 20%.
Image Source: Zacks Investment Research
Currently, WFC carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Financial Misconduct by Other Firms
Earlier this month, HSBC Holdings plc (HSBC - Free Report) was fined £57.4 million by Bank of England (“BoE”) for “serious failings” over its measures to protect customer deposits between 2015 and 2022. The fine is the second-biggest fine ever imposed by the regulator, which reflects the seriousness of the failings.
BoE’s Prudential Regulation Authority said that HSBC failed to accurately identify deposits eligible for Britain’s Financial Services Compensation Scheme, which protects up to £85,000 in customer bank accounts.
The Goldman Sachs Group, Inc. (GS - Free Report) was investigated for fees that it charged for futures trading. The investigation was carried out following a whistle-blower tip. The news was first reported by Bloomberg, citing people with knowledge of the matter.
Commodity Futures Trading Commission privately authorized sending warrants to GS to receive information about fees charged for some futures block trades.