Wells Fargo & Company disclosed that it is under investigation over cash sweep options provided to its investment advisory clients, Reuters reports.
The disclosure of the probe by the Securities and Exchange Commission came in a regulatory filing by the bank.
The SEC is looking into cash sweep options provided to customers at the time they open their accounts. Wells Fargo Advisors offers a sweep feature with three options for clients to earn a return on uninvested cash balances in their accounts. These include a standard bank deposit sweep, expanded bank deposit sweep and a money market fund sweep. Clients opening accounts are placed into a default option based on the type of account and advisory program they are using
The filing did not include additional details regarding the nature of the investigation, and Wells Fargo did not provide any further comment.
The SEC’s probe follows other recent regulatory actions involving Wells Fargo, including charges that the bank imposed excessive advisory fees to clients.
Under a settlement with the SEC in September, Wells Fargo agreed to reimburse about $40 million to the clients who were affected.
In January, Wells Fargo Bank was penalized by the Consumer Financial Protection Bureau for widespread mismanagement of customer accounts. The CFPB said the bank was responsible for illegal activity over a period of several years that affected over 16 million auto loans, mortgages and deposit accounts. Wells Fargo was ordered to pay a total of $3.7 billion that included a $1.7 billion civil penalty and over $2 billion in compensation to customers.
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