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Wells Fargo’s Wealth-Management Business Faces SEC Probe

  • Agency reviewing if bank made inappropriate client referrals
  • Wells Fargo has disclosed feds are examining wealth management

Wells Fargo & Co. faces an investigation by Wall Street’s top regulator into whether it inappropriately sold clients in-house investment services that may not have been in their best interests, said a person with knowledge of the matter.

The U.S. Securities and Exchange Commission is concerned that the bank might have made customer referrals that violated securities laws, said the person who asked not to be named because the agency’s involvement in the probe isn’t public.

SEC spokeswoman Judith Burns and Wells Fargo spokesman Ancel Martinez declined to comment.

Wells Fargo disclosed in a Thursday regulatory filing that it is “assessing whether there have been inappropriate referrals or recommendations, including with respect to rollovers for 401(k) plan participants, certain alternative investments, or referrals of brokerage customers to the company’s investment and fiduciary-services business.” The bank added that the review of its wealth management business was prompted by inquiries from federal agencies.

The SEC has previously sanctioned banks for improperly selling customers in-house investment products. In 2015, JPMorgan Chase & Co. agreed to pay $267 million to settle allegations that it didn’t tell customers that it reaped profits by putting their money into mutual funds and hedge funds that generated fees for the company.

— With assistance by Laura J Keller

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