The hits keep happening.
“The investigation seeks information related to inappropriate referrals of brokerage customers to managed and advisory accounts, unsuitable recommendations of alternative investments, as well as unsuitable referrals and recommendations in connection with 401k rollovers,” the announcement read.
The news came after the Justice Department ordered the Wells Fargo board last week to investigate inappropriate 401k rollover claims.
“Wells Fargo’s recent banking scandal, which involved opening bogus accounts for their customers, leads me to believe that where there is smoke, there’s fire,” Galvin said. “I need to be assured that Massachusetts residents haven’t been burned by corporate greed.”
Wells Fargo disclosed in a recent regulatory filing that it is “assessing whether there have been inappropriate referrals or recommendations, including with respect to rollovers for 401k plan participants, certain alternative investments, or referrals of brokerage customers to the company’s investment and fiduciary services business.”
As part of the investigation, Galvin’s office said it “will be seeking additional information to determine the scope of Wells Fargo’s internal investigation, as well as reasonable assurances that any Massachusetts investors affected by unsuitable recommendations will be made whole.”
The accusations are the latest in a long list for the bank in recent years, beginning with a “phantom” bank account scandal that led to the ouster of then CEO John Stumpf in 2016. PR headaches haven’t gotten better for the bank in the time since, with legal action and regulatory sanction ongoing related to a number of issues.
“I am aware that there has been a recent trend in the industry to push investors into wealth management accounts which may bring more revenues to the firm, but which are not suitable for all investors,” Galvin said. “Given the recent retirement savings crisis in America, referrals and recommendations involving 401k accounts should be closely scrutinized, in light of the Department of Labor’s Fiduciary Rule.”