WFC Wells Fargo and Company

By Ben Eisen and Rachel Louise Ensign 

Wells Fargo & Co. is nearing settlements with the Justice Department and the Securities and Exchange Commission over its long-running fake-account scandal, according to people familiar with the matter.

The bank could pay roughly $3 billion combined, some of the people said. The settlements could come as soon as Friday, the people said. The DOJ portion of the settlement could include criminal charges, some of the people said.

People familiar with the matter said the settlements are expected to be only with the bank, not with former executives. Regulators and prosecutors could still take action against individuals, these people said. Last month, the Office of the Comptroller of the Currency charged eight former Wells Fargo executives over the fake-account scandal, including the former CEO.

Charles Scharf, Wells Fargo's new CEO, has said his priority is resolving the bank's regulatory issues. The bank had previously disclosed the probe by the Justice Department and SEC, which is one of its biggest outstanding regulatory problems.

Investigators interviewed former executives including former Chief Executive Officer Timothy Sloan in connection with the probe, the Journal has reported.

Wells Fargo for years enjoyed a reputation as a folksy industry darling that catered to Main Street customers. But that reputation was left in tatters after it became public that an aggressive sales culture led employees to open millions of possibly fake accounts, spurring outrage among regulators, lawmakers and customers.

The bank settled with the OCC, the Consumer Financial Protection Bureau and the Los Angeles City Attorney's office in 2016. Days later, the Journal reported that federal prosecutors were in the early stages of an investigation into those same sales practices.

Since then, the bank has struggled to recover. The scandal has claimed two CEOs, and what was once a fast-growing bank whose profits towered above those of rivals has become a company with declining revenue that is leaning heavily on cost cuts.

The potential settlement with the DOJ and SEC was earlier reported by the New York Times.

The lender has no shortage of other regulatory problems: It recently had hundreds of private regulatory warnings known as "Matters Requiring Attention," the Journal has previously reported. Hiring staffers to help fix these issues has been costly and forced the bank to dial back expense-cutting targets.

It also is under sanction by the Federal Reserve, which has taken the unusual step of capping the bank's growth. Settling with the DOJ and SEC should allow the bank to focus on persuading the Fed to lift the cap.

--Aruna Viswanatha and Dave Michaels contributed to this article.

Write to Ben Eisen at ben.eisen@wsj.com and Rachel Louise Ensign at rachel.ensign@wsj.com

(END) Dow Jones Newswires

February 21, 2020 12:42 ET (17:42 GMT)

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