Wells Fargo sees rising legal risk amid sales abuse probe

Bloomberg

Wells Fargo & Co. boosted an estimate for potential legal losses by $500 million while disclosing that it’s in early talks to resolve another round of probes into sales abuses at its branches.
The company said it might have to spend as much as $2.7 billion more than what it set aside by the end of December to resolve a variety of investigations and other legal troubles — up from $2.2 billion at the end of September. The higher estimate for “reasonably possible” legal losses — essentially a worst-case scenario — shows risks grew as the bank and authorities examined abuses in recent months and discussed potential penalties.
The change stems from “a variety of matters,” including probes of its sales to retail customers, Wells Fargo wrote in an annual regulatory report. The bank said it’s in preliminary or exploratory talks to resolve those probes with the Justice Department and Securities and Exchange Commission, but “there can be no assurance as to the outcome.”
Scandals erupted in 2016 in Wells Fargo’s branch network, where employees facing aggressive quotas opened millions of bogus accounts, and have since emerged across other business lines. Chief Executive Officer Tim Sloan, a three-decade company veteran who took the helm as the troubles forced out his predecessor that year, faces heightened scrutiny from Washington in coming months as he tries to lead the bank through the turmoil.
Sloan is set to appear before the House Financial Services Committee next month for a hearing on the bank’s abuses and cleanup. Meanwhile, Senator Elizabeth Warren has ramped up calls for his ouster as she launches a 2020 presidential campaign.