Wells Fargo, one of the largest American banks, was forced to pay $3 billion fine to resolve the bank’s fake-account scandal which erupted almost four years ago. The fine could have been even bigger but the parties managed to reach a settlement. The bank is now due to pay the financial penalty to both the US Department of Justice (DOJ) and the Securities and Exchange Commission (SEC). Wells Fargo CEO Charlie Scharf admitted that “the conduct at the core of today's settlements—and the past culture that gave rise to it—are inconsistent with the values on which Wells Fargo is built.” He also pledged to make fundamental changes to the company’s business model, compensation strategies, leadership structure, and management practices. Notably, the problems began when the bank’s management set unrealistic sales goals. This pushed the bank employees to resort to inappropriate activities such as creating fraudulent accounts. As part of the deal, the US Department of Justice has allowed the bank to avoid criminal prosecution for the wrongdoing which took place between 2002 and 2016. Wells Fargo’s payment includes a $500 million civil penalty which will be allocated to the SEC. The regulator will use these funds to provide some restitution to the investors affected by the fraud. Along with JPMorgan Chase, Bank of America, and Citigroup, Wells Fargo is one of the "Big Four Banks" of the US. Currently, the bank has nearly $2 trillion in assets.
