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More trouble for Wells Fargo: Alleged brokerage consumer abuses

A Massachusetts regulator is investigating whether employees of Wells Fargo & Co.'s brokerage division violated securities regulations and abused consumers' trust. Federal investigators may also be pursuing the question.

The Massachusetts investigation comes just one week after Wells Fargo announced that an internal review of Wells Fargo Advisors found that brokers had given inappropriate referrals or advice or recommended unsuitable investments.

The banking giant is also reviewing whether consumers were overcharged for some fiduciary and custody accounts at Wells Fargo's wealth management business. These could include trusts, which are used broadly by ordinary consumers as part of estate planning.

The internal review was not entirely proactive on the part of Wells Fargo, but prompted by pressure from federal regulators. This is likely in response to the host of consumer protection scandals that have plagued the banking giant over the last couple of years.

In September 2016, for example, Wells was accused by federal and state regulators of attempting to meet internal sales quotas by opening at least 3.5 million false or unauthorized consumer accounts. Wells settled the case for $190 million.

In 2017, the New York Times reported that Wells Fargo had forced unnecessary collision insurance on car buyers who financed auto loans through the bank. Among some 800,000 customers affected, some 274,000 were sent into delinquency due to the overcharges and 25,000 vehicles were repossessed as a result.

More recently, a whistleblower accused Wells Fargo of closing consumer accounts upon noticing fraudulent activity rather than investigating and helping resolve the fraud. These are not the only recent scandals involving Wells.

In this most recent case, the Massachusetts Secretary of the Commonwealth said in a statement, "Wells Fargo's recent banking scandal, which involved opening bogus accounts for their customers, leads me to believe that where there is smoke, there's fire. I need to be assured that Massachusetts residents haven't been burned by corporate greed."

If you are a customer of Wells Fargo bank or Wells Fargo Advisors, you may have been affected by one or more of these scandals. In this latest case, some of the allegations involve securities violations. A consumer law attorney may be able to help you seek redress after unsuitable investment recommendations or other violations through a Financial Industry Regulatory Authority dispute resolution process.

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