|Published : 16 Sep 2016, 14:35:14 | Updated : 16 Sep 2016, 14:36:32|
Wells Fargo faces scrutiny over lack of sales scandal disclosure
A phantom account scandal at Wells Fargo & Co has put the US bank's disclosure policies under a harsh spotlight.
Despite press reports that a federal regulator and the Los Angeles prosecutor were investigating sales practices at retail branches of the San Francisco-based lender, the bank, which agreed to a $190 million settlement, gave investors no indication of the scale of the problem.
The surprise spooked investors and has lopped roughly $19 billion off its market value since the probe disclosed last week that Wells employees had created roughly 2 million accounts for customers without their knowledge in order to meet internal sales targets. The bank has fired 5,300 people over the scandal.
While the settlement barely makes a dent in the $23 billion of profit the bank earned last year, the scandal's aftermath has caused a 7.5 per cent drop in Wells' stock compared with a roughly 2.4 per cent decline for the Dow Jones US Banks Index, according to Reuters.