Wells Fargo & Co.’s board is looking into whether its wealth-management business gave customers improper recommendations on 401(k) rollovers and other products.
The review, which is in response to inquiries by federal government agencies, “is assessing whether there have been inappropriate referrals or recommendations, including with respect to rollovers for 401(k) plan participants, certain alternative investments, or referrals of brokerage customers to the company’s investment and fiduciary-services business,” the bank said Thursday in a regulatory filing.
The Justice Department told Wells Fargo to investigate claims of sales abuses by whistle blowers, the Wall Street Journal reported Thursday. The bank hired Shearman & Sterling LLP to look into the question, which relates to pushing products and services on customers that generate the most compensation for employees rather than finding the best options for clients, according to the newspaper.
Wells Fargo’s filing didn’t say whether the board hired an outside firm to conduct the investigation.
The allegations follow by a year and a half the bogus-account scandal that brought down former Chief Executive Officer John Stumpf and led to unprecedented sanctions by the Federal Reserve that prevent Wells Fargo from increasing assets past $1.95 trillion until it improves internal oversight.
“To date, we haven’t found any sales practices-related type issues in wealth management,” CEO Tim Sloan said in a Feb. 12 interview with Bloomberg. “But that could change.”
Shares of the company fell 1.4 percent to $57.62 at 1:14 p.m. in New York trading.