September 28, 2016
California State Treasurer John Chiang has announced that Wells Fargo has been suspended from doing business with the State of California for the next 12 months, due to fraudulent activity. It recently came to light that Wells Fargo employees created fake accounts, resulting in a $185 million fine and 5,300 firings.
As of now, the suspension is focused on “key business activities,” but could extend to a total ban on the bank if the entity cannot prove that it has changed its culture. Wells Fargo is suspended from such dealing as underwriting State negotiated bond sales, and broker-dealer investment purchasing.
The San Francisco-based bank will work with California’s pension funds, CalPERS and CalSTERS to restructure its culture. Together, the funds hold more than $2.3 billion in Wells Fargo equity and fixed income.
In a letter to the bank, Chiang wrote, “Wells Fargo‘s fleecing of its customers by opening fraudulent accounts for the purpose of extracting millions in illegal fees demonstrates, at best, a reckless lack of institutional control and, at worst, a culture which actively promotes wanton greed.”
This story has been edited and updated to reflect the following changes:
- Sentence changed from “business in the state of California” to “business with the State of California”
- To clarify, the State of California has suspended business with the governmental entity, Wells Fargo can still do business with clients in California
- $185 billion has been corrected to $185 million
Connect Media regrets any confusion the errors may have caused.