Society

Pennsylvania Suspends Relationship With Wells Fargo

| by Lauren Briggs

The state of Pennsylvania is suspending its business relations with Wells Fargo for at least one year, following revelations the bank opened 2 million fraudulent accounts to boost sales.

State Treasurer Timothy Reese announced on Nov. 3 that the company will be banned from all trading activities and treasury investment in Pennsylvania for one year, reports Bloomberg. Reese also noted that he is open to re-evaluating the bank if it demonstrates it is taking adequate steps to correct the problem.

"The bank's actions call into question its internal controls and culture, and until the bank fixes those problems, they will not be eligible for investment or trading work with Treasury," Reese said in a statement.

Pennsylvania joins California, Illinois, Massachusetts and Ohio, all of which have made similar moves in suspending relations with the company, which is under criminal investigation and has agreed to pay $185 million after claims surfaced that employees opened extra accounts without customer authorization to raise the number of reported sales, resulting in additional fees for many of those affected.

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According to Reese, the bank opened up to 80,000 fraudulent accounts in Pennsylvania, although only 2,600 accounts have been reimbursed for extra fees.

Wells Fargo CEO John Stumpf has since stepped down, and the bank says it is taking steps to ensure  something similar does not happen again. According to a statement released to customers, the bank is working to issue refunds to everyone who was affected, has added proper notifications for all open accounts and has eliminated the high sales goals that led to the unauthorized accounts opening in the first place, notes the Atlanta Business Chronicle.

"We are deeply committed to serving you and your financial needs, and in those instances, we did not live up to our commitment," Wells Fargo's statement reads. "This is inconsistent with our values and with the culture we work hard to maintain. It's not who we are as a company."

Sources: Bloomberg, Atlanta Business Chronicle / Photo credit: Ken Lund/Flickr

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