The Treasurer of Illinois, Michael Frerichs, has suspended annual investment activity of $30 billion with Wells Fargo for a period not less than a year following the recent claims of 2 million phony accounts. During the period, the office will oversee over $1 trillion in annual transactions, Frerichs says. Following the move, Wells Fargo will lose “hundreds of millions of dollars” in the investment fees resulting from the action.
“Wells Fargo is one big financial player within Illinois, and I hope this will send a clear message that their dishonest practices will never be tolerated and are not welcomed,” Frerichs said in a news conference.
The consequences come after the news that Wells Fargo will be responsible for paying over $185 million in civil settlement for fines and restitution after admitting that their employees had opened more accounts that were never authorized by clients. During the period, Wells Fargo has fired over 5,000 employees from this unscrupulous behavior.
Since the announcement of this settlement, the Labor Department has initiated an investigation into the labor practices of the bank. Also in past few days, Senate & House committees did grill CEO of Wells Fargo, John Stumpf, who agreed to put up $41 million in the unvested stock awards following the investigation of the board of directors. Wells Fargo is among the largest banks in the US.
Frerichs also added that the state was to audit all other relate businesses of Wells Fargo to clear them of any kind of wrongdoing. In addition, the bank has taken new measures to ensure that they rebuild the trust of the public following the unscrupulous behavior of employees that is against the laws regulating the banking sector in the US.
In addition, last week, the Transportation authority of New York Metropolitan opted not to include the banks as among the pre-authorized for available underwriting bonds as part of the regular 3-year process before reviewing their business activities in the last five years.
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