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People walk by a Wells Fargo bank branch on October 13, 2017 in New York City.
Just when it seems like Wells Fargo’s troubles are behind it, another mole pops up from the whack-a-mole machine.
The bank’s wealth advisory business is now in focus. According to The Wall Street Journal, citing people familiar with the matter, whistleblowers in the division, called Wells Fargo Advisors, flagged problems related to product and service sales made “with an eye toward earning more compensation than finding the best fit for the customer.”
The wealth advisory division was once led by Mary Mack, the executive chosen in 2016 to clean up sales practices in the retail bank that got Wells into hot water with regulators two years ago. Since then, questionable sales practices have been unveiled not only in its branches but in its auto and home loan divisions and now, evidently, its advisory business.
The WSJ reported Thursday that the Justice Department asked the bank late last year to do an independent investigation after the whistleblowers came forward. The paper said Wells hired the law firm Shearman & Sterling to do that assignment.
Sales suitability with fund products has been a recurring issue in the brokerage industry and a focus of enforcement by the Financial Industry Regulatory Authority.
In 2015, Wells Fargo Advisors was ordered to pay $15 million to compensate customers after failing to waive certain sales fees. And last November, the bank was ordered to pay $3.4 million for unsuitable recommendations of volatility-linked exchange traded products.