National Bank Settles Charges for Misleading Investors regarding its "Cross-Selling" Business Model

A national bank agreed to pay $65 million to settle charges for misleading investors by failing to disclose sales misconduct, which affected its reported "cross-sell" (i.e., selling products/services to existing customers) metrics.

According to the settlement agreement, Wells Fargo & Company ("Wells Fargo") failed to disclose to investors that the success of its "cross-sell" business model was built on sales misconduct at the bank. The Office of the Attorney General of New York alleged that employees in Wells Fargo's community bank (i) opened 3.5 million possibly fraudulent deposit, credit and line of credit accounts without the knowledge or consent of its customer and (ii) used email addresses that did not belong to customers to enroll them in online banking services, among other things.

Wells Fargo neither admitted to nor denied the OAG's findings.