This article was originally published by Law360.com
FINRA Seeks Information From Fired Wells Fargo Reps
By Carmen Germaine
Law360, New York (December 9, 2016, 9:19 PM EST) — The Financial Industry Regulatory Authority on Friday asked former employees of Wells Fargo to come forward if they believe the bank fired them for blowing the whistle on its sham customer accounts and used termination notices to further retaliate or hide its tracks.
FINRA is investigating reports that Wells Fargo & Co. employees were fired for trumped-up reasons after trying to blow the whistle on the bank’s phony customer accounts. (AP)
FINRA’s announcement said that the self-regulatory organization has asked former Wells Fargo & Co. employees who were registered with FINRA to come forward if they have any concerns about how the bank reported their termination as part of a review into media reports that some employees were fired for trumped-up reasons after trying to blow the whistle on the bank’s phony accounts.
The consent order Wells Fargo inked in its $185 million settlement with the Consumer Financial Protection Bureau said that the bank had terminated roughly 5,300 employees for engaging in improper sales practices between 2011 and 2015. A letter sent to Wells Fargo CEO Timothy Sloan by Sen. Elizabeth Warren, D-Ma., and other lawmakers in November said FINRA staff have found more than 600 of those employees were working for Wells Fargo subsidiaries such as Wells Fargo Advisors and registered with FINRA during that time and that 207 of them were terminated “for issues that fall within the scope of the CFPB order.”
FINRA requires member firms to file reports called a “Uniform Termination Notice for Securities Industry Registration,” or a Form U5, within 30 days of a representative leaving the firm. The forms include information on why the employee has left and are typically reviewed by firms when they hire new representatives.
Several news reports since the CFPB article have quoted Wells Fargo employees who alleged that the bank fired them after they refused to open accounts without customers’ consent and then lied about the reason for their termination on the forms.
In an NPR report, two former Wells Fargo employees said they felt that they had been fired in retaliation for expressing concerns about the bank’s aggressive sales practices. One ex-employee said that after he was pressured into quitting when he raised concerns, he discovered Wells Fargo had reported on his Form U5 that he was terminated for opening accounts without customers’ consent, a black mark that made it extremely difficult for him to find a new job.
Another said Wells Fargo had reported he was fired for accepting a credit card application that he knew was not signed by the applicant, even though at the time his manager had told him that was okay. He told NPR he believed the real reason he was fired was because he raised concerns about the sales goals and reported coworkers who broke the rules to meet the targets.
Two other former Wells Fargo reps told CNNMoney they were fired after calling into a Wells Fargo ethics hotline to report the sales practices. But the bank reported one employee was fired for tardiness, and the other said she was pressured into falsely admitting she had doctored documents.
FINRA said it had created a dedicated phone line and email address that former Wells Fargo employees could use to report issues or concerns with their Form U5 notices, including if the employee felt Wells Fargo had inaccurately or incompletely described why they were terminated.
The request comes after the Wall Street regulator said in October that it is reviewing how broker-dealers incentivized employees to cross-sell retail accounts. FINRA asked broker-dealers to provide information on their cross-selling programs, including lists of customers who had accounts opened without their consent and lists of employees who were terminated for either not meeting production goals or engaging in improper activities related to the program.
Warren said in her letter to Sloan that FINRA is also working with Wells Fargo, in part to determine which of the 5,300 terminated employees were registered with the organization. The senator asked Sloan to answer a number of questions about how the bank filed Form U5s, saying available information “paint[s] a disturbing picture” and raises questions about whether Wells Fargo retaliated against whistleblowers by reporting defamatory information on the reports in violation of FINRA rules.
FINRA isn’t the only regulator breathing down Wells Fargo’s neck over its employment practices after the CFPB settlement. The U.S. Department of Labor said in September that it is conducting a “top-to-bottom” review of the bank, after Warren and other Democratic lawmakers urged the agency to investigate whether Wells Fargo violated labor laws by forcing employees to work unpaid overtime to meet the aggressive sales quotas.
The bank was also hit with a $2.6 billion putative class action in California state court in September on behalf of California workers who were allegedly fired or demoted for refusing to participate in the scam.
Wells Fargo’s then-CEO and Chairman John Stumpf testified before the U.S. Senate Banking Committee in late September, apologizing for the account openings and saying the company had let down its customers and employees. He abruptly retired in October, ending his 34-year tenure at the bank.
In early October, California Attorney General Kamala Harris launched an investigation into whether the bank committed felony identity theft when it opened unauthorized accounts for California customers.
The CFPB and the Office of the Comptroller of the Currency have since started reviewing sales practices at other big banks to ensure unauthorized account generation is not taking place.