Wells Fargo Fined $35M by SEC for Overbilling Advisory Clients
Wells Fargo Clearing Services and Wells Fargo Advisors Financial Network were fined $35 million by the US Securities and Exchange Commission (SEC) for overcharging roughly 11,000 investment advisory accounts a total of $26.8 million in fees over a two-decade period.
According to the SEC’s findings, certain financial advisors and its predecessor firms negotiated cheaper fees for select clients beginning in 2002. These arrangements were documented by making changes to the investment advisory agreements during the account opening process.
But the implementation of these lower fee agreements fell through. Employees in charge of processing accounts failed to appropriately input agreed-upon fee rates into billing systems when establishing the accounts, resulting in certain clients being overcharged fees until December 2022.
In response to the SEC’s findings, Wells Fargo has given approximately $40 million to affected accountholders, including interest, as compensation for the excessive charges.
While the bank has not admitted to or denied the charges, it has consented to the Commission’s order. The bank has also agreed to a cease-and-desist order and censure.
