American Banking Giant To Stop Broker Bonuses And Mortgages Programs In The Middle Of $185 Million-Fine Recovery As Bank Faces More Charges
In an effort to lessen the damage of the $185 million fine imposed against Wells Fargo (NYSE:WFC) & Co, the bank has now announced that they would not be offering broker bonuses and other programs and products.
One of the products which would not be offered any longer by the bank is their mortgage program. The bank recently suffered a huge setback after the bank’s actions regarding their target sales quotas imposed on their employees resulted in a $185 million suit.
Although it has announced that it would be taking full responsibility of the said fine, Wells Fargo is now facing another set of claims and accusations this time in connection to clients being signed into Prudential Financial Inc (NYSE:PRU).
The Securities and Exchange Commision have also placed the banking giant recently under questioning to whether how Wells Fargo’s portfolio has been placed under valuing and accounting before the bank supplied more the agency more information leading it to end its interrogation. Back in October, the bank has defended itself stating that the portfolio was affected by their own loan-modification actions. Aside from those efforts, certain economic events or changes also impacted Wells Fargo’s loan change efforts.
Wells Fargo Shares For The Past Month
For the past couple of weeks, shares of American bank Wells Fargo & Co have dropped on news that the bank is to be fined by almost $185 million by the Los Angeles City and Country along with the Consumer Financial Protection Bureau’s Civil Penalty Fund, and the Office of the Comptroller in connection to a scandal the bank faced. The scandal which led to lawsuits being filed against the management of the bank was claims of the bank employees opening unauthorized accounts through the use of existing client information without their knowledge.
By November, Wells Fargo shares have recovered by as much as 15% from a total of 16.5% decline following the scandal signaling a recovery. The results of the U.S. presidential elections also contributed to the recovery of the ailing bank. Wells Fargo also turned into an oversold stock a couple of days after the U.S. elections as markets absorbed what a Trump presidency could affect financial stocks including Wells Fargo.
The unauthorized accounts were also charged to the client’s existing savings or credit card accounts without their knowledge. Wells Fargo’s market capitalization then dropped leading them to place only second as the biggest bank in the U.S. next to JPMorgan (NYSE:JPM).
On the bank’s announcement that they would be paying the $41 million part of the fine, shares of Well Fargo rallied by as much as 2.8% before it slumped down to as much as 2.3% again last Wednesday on the news of the situation in connection with Prudential Financial Inc (NYSE:PRU) life. Although it has recovered up from a low trading price around $43.55, it has returned and gained momentum again to as much as $55.19.
Wells Fargo shares are now trading at around $55.19 a long way up from its recent decline a month ago around the $43 level. The massive oversell in Wells Fargo shares gave the banking giant more chances to redeem themselves from the massive scandal that dethroned them as the top bank with the largest market cap in the U.S. The market’s attention to the upcoming administration is also set to divert the attention placed on the scandal away from the bank.