Illinois Becomes Second State to Sanction Wells Fargo
Illinois State Treasurer Michael Frerichs announced Monday that the state would sanction Wells Fargo after learning of its fraudulent business practices. California placed sanctions against the bank last week.
The State of Illinois will suspend business with the bank for at least one year. Frerichs said the move could cost Wells Fargo “tens of millions” in fees and commissions. However, Wells Fargo said the sanctions will likely cost closer to $50,000.
The bank has admitted that two million accounts were opened without customers’ knowledge. Employees opened the accounts because they were under pressure to meet sales goals. Senior management allegedly knew about this fraudulent activity. The fake accounts may have damaged customer credit scores and cost millions in service fees.
Wells Fargo has said it will work to restore the state’s trust.
“We certainly understand the concerns that have been raised,” the bank said in a statement. “We are very sorry and take full responsibility for the incidents in our retail bank. We have already taken important steps, and will continue to do so, to address these issues and rebuild the state’s trust.”
While the sanctions will be costly to Wells Fargo, Frerichs said he does not expect the suspension to cost Illinois any money, as they work with 50 other approved broker-dealers that can replace Wells Fargo. Last year, Wells Fargo handled about $30 billion of an estimated $1 trillion in state investment activity.
The state is also undergoing an investigation to see if Illinois residents are owed any money from Wells Fargo. Frerichs is also asking the Illinois State Board of Investment to re-evaluate any state pension investments held with the bank.