Date Filed: September 27, 2021 Court: United States District Court for the Southern District of New York Plaintiff: United States of America Defendant: Wells Fargo Bank N.A. CASE INFORMATION: From 2010 through 2017 (the “Covered Period”), Wells Fargo defrauded 771 commercial customers, many of whom were small and medium-sized businesses or federally-insured financial institutions, using the Bank's foreign exchange services, in violation of the Mail Fraud, Wire Fraud, and Bank Fraud Acts, 18 U.S.C. §§ 1341, 1343, and 1344. §§ (i) misrepresented to customers that the Bank would charge and/or was charging certain fixed foreign exchange spreads or sales margins (which the Bank sometimes referred to internally as “Fixed Pricing Agreements”) on foreign exchange transactions the customers entered into with the Bank, (ii) financially incentivized its foreign exchange sales specialists to overcharge customers while failing to take steps to ensure that the foreign exchange sales specialists would comply or were complying with the Fixed Pricing Agreements, and ( iii) systematically charging customers higher foreign exchange spreads or sales margins than Wells Fargo indicated it would charge and/or was charging in the Fixed Pricing Agreements or other agreements, while concealing the overcharges from customers. Through this brazen and wide-ranging fraud, Wells Fargo was able to secretly obtain tens of millions of dollars from its customers that the Bank was not entitled to. Plaintiffs' Argument. Wells Fargo profited from its foreign exchange transactions with its customers by inflating the prices at which it sold currencies and lowering the prices at which it bought currencies from its customers in order to satisfy its customers' outgoing and incoming wire transfer needs. During the Covered Period, many Wells Fargo foreign exchange sales specialists systematically overcharged hundreds of the Bank's commercial customers for fraudulent charges, repeatedly charging customers higher sales margins or spreads on their foreign exchange transactions than they claimed the Bank would charge and/or was charging. At times, Wells Fargo's foreign exchange sales specialists charged different spreads to the same customer depending on the customer representative involved in the execution of the transaction. Specifically, Wells Fargo's foreign exchange sales specialists would charge larger spreads on trades requested by certain customer representatives who were deemed to be unsophisticated or inexperienced in foreign exchange trading. By giving foreign exchange sales specialists undue financial incentives to prioritize maximizing foreign exchange earnings while not providing meaningful or effective oversight to prevent its employees from fraudulently overcharging customers, Wells Fargo created a work environment in which it became normal business practice to defraud or otherwise take advantage of customers. Laws Cited. Financial Institutions Reform, Recovery, and Enforcement Act (“FIRREA”), 18 U.S.C. § 1833a Mail Fraud, Wire Fraud, and Bank Fraud Statutes, 18 U.S.C. §§ 1341, 1343, and 1344 Forum, 28 U.S.C. §§ 139l(b)(l) and (b)(2) AML (Anti-Money Laundering) Defendant's Argument. Pleaded guilty Agreed to a stipulation CASE JUDGMENT: Wells Fargo admits, acknowledges, and accepts responsibility for the following conduct: Wells Fargo shall, within fourteen (14) days of the Effective Date, pay the following: (a) $35,337,319.90 to the United States, plus interest as set forth below, which amount shall constitute a civil penalty under FIRREA (the “Civil Penalty Amount”); and (b ) the payment of $2,000,000.00, plus interest as provided below, which amount shall be forfeited pursuant to 18 U.S.C. 981(a)(1)(C) (the “Forfeiture Amount”). Interest under this paragraph shall accrue at the rate of 1.63% per annum compounded annually from May 28, 2021 until the date of payment of the amount of the Civil Penalty and the Forfeiture Amount under this paragraph. Wells Fargo will pay the Civil Penalty and Forfeiture Amount in accordance with instructions provided by the United States Attorney's Office for the Southern District of New York.