Wells Fargo & Co (NYSE:WFC) is now facing a number of lawsuits in Los Angeles, after a number of its employees allegedly opened unauthorized accounts for customers. The civil complaint is being refered to as “a fee generating machine.” This is the second suit against the company, in less than a month. The previous one involved the company violating the 2010 mortgage settlement, in which the company was found guilty.
The first case saw the company getting its credibility violated. The bank was found guilty for breaching a nationwide 2010 legal settlement with homeowners. Wells Fargo is said to not scrutinizing homeowners effectively. The homeowners in the lawsuit were thought to have been seeking the banks assistance to avoid foreclosures. The bank was asked to correct the violations and allow the effected ones to reapply for loans.
Now the bank is caught in yet another controversy, where it has been setting “unrealistic quotas for its employees”. The employees have to meet these requirements by selling bank products in any way possible. This had led to the employees resorting to fraudulent means to fulfill their required quotas. It is believed that these employees made use of confidential customer information and failing to abide by customer complains to close these accounts. The lawsuit also claims that some of these employees went as far as raiding client accounts for money.
There have also been charges against forgery by these employees. The customers stated that the accused had opened ghost accounts, which the customers did not request and even forged signatures to do so. The contact information was also misleading so the customers would not be alerted of the developments. The move had affected credit reports of the involved customers. The blame is, however, being put on the company for pressurizing its employees to resort to such methods.
Wells Fargo & Co (NYSE:WFC) closed at $56.05, after gaining 2.26% on May 8. The company has 5.15 billion shares being traded in the market, with a 52-week range of $46.44-$56.29.