More Than Previously Expected

Now it looks like it’s going to take a lot more than they thought. According to a recent Reuters report, the number of individuals affected by the accounts fraud scandal is far more than previously expected. In fact, it’s nearly double the initial figure. What was once nearly 2 million unauthorized account creations has now ballooned into 3.5 million. While the recent estimate is based on new case discoveries and hearings, Wells Fargo attorneys claim that it is largely “hypothetical” and “unverified”. Attorneys representing plaintiffs concur that it may be “over-inclusive”, but that the estimation provides a reasonable base for total compensation to plaintiffs.

Can a Settlement Be Reached?

Understandably, Wells Fargo has been keen to settle the matter. The big bank’s attorneys have already increased its initial settlement figures from $110 million to $142 million to account for more-than-expected numbers of affected accounts.

Preventing Future Accounts Fraud

The best method of preventing becoming a victim to accounts fraud is through awareness and education. Don’t be intimidated by big banks. You have the right to financial security. Make sure you regularly review all current accounts and monthly statements with any financial institution. You can follow our blog to stay up to date on legal tips, news and insights. Contact us with any legal questions or concerns regarding you financial security.

This week, the Securities and Exchange Commission (SEC) indicated that it would be calling on a need for more oversight from its financial regulation partner, the Financial Industry Regulatory Authority (FINRA). The decision to shift responsibility comes with an SEC initiative to devote more energies towards the rise of independent financial advisers. New business models offering greater independence and variety of investment services have led to an increase in the registration of investment advisers. Since this increase, the SEC has been criticized for lack of oversight, managing to examine only 10 percent of new investment adviser registrations per year. The SEC is increasing their investment adviser oversight an extra 20 percent to meet the growing number of independent advisement services. As the SEC’s new focus will take examiners away from the Wall Street sector, it says it will need FINRA to step up their efforts to brokerage oversight. While the SEC won’t be entirely removed from brokerage oversight, FINRA seems to be handling the shift well. On Tuesday, Reuters reported that FINRA had fined Bank of America’s Merrill Lynch $2.8 million for record-keeping and trade reporting violations. FINRA is an independent, financial regulatory organization. It is a privately-funded organization but it seems committed to it’s self-regulatory purpose. In regards to the Merrill Lynch fine, FINRA head of market regulation reiterated that accuracy of information reported by broker-dealers was critical for market integrity, according to the Reuters report. Regardless, the SEC wants to ensure that brokerage oversight will remain a priority. They will be keeping regulators focused on brokerage oversight in New York and Chicago, two of the largest brokerage sectors. They will also be overseeing FINRA’s efforts. Reuters reports that a group named FINRA and Securities Industry Oversight will monitor FINRA’s brokerage oversight examiners from offices in various major U.S. market sectors.

Some of the nation’s top banks are facing another bad week, legally and financially as they are subjected to increased scrutiny and demand for reparations from federal regulators. Wells Fargo faces a continued inquest into the extent of its accounts fraud scandal as regional and municipal governments, including Hillsborough County, look further into their interests with the banking giant. A top financial regulator in Massachusetts is now charging Morgan Stanley with unethical conduct following a claim of a sales contest among Morgan Stanley brokers pushing securities-backed loans onto clients. Additionally, German banking giant Deutsche Bank is facing slipping stocks and credibility as it struggles to reach a conclusion with U.S. courts over an up to $14 billion fine for mis-selling mortgage-backed securities, according to a report from Reuters. The report states that Deutsche Bank’s U.S. stock-holdings fell about 2.8 percent.

Déja Vu with Morgan Stanley?

Though Morgan Stanley vehemently denies the charges put forth by William Galvin, Secretary of the Commonwealth, that the company is guilty of unethical conduct, it does not deny the existence of the sales contest. The contest involved cross-selling banking products, mostly securties-based loans, to Morgan Stanley’s brokerage clients. Glavin’s claim asserts that this cultivated a “high pressure” environment to meet contest goals that was against Morgan Stanley’s corporate policy. Morgan Stanley did suspend the contest after the contest was discovered to be inconsistent with corporate policies, but maintain that no accounts were opened without customer understanding and consent.

Tensions Running High

Public opinion and federal regulators are taking a vigorous and critical look at big banking tactics following the Wells Fargo scandal. With the aftermath of the 2008 financial crisis still looming in the economy’s rear-view, regulators and banking customers raise concerns over fundamental flaws in ethical banking procedures and continue to examine banks’ financial interests.