Wells Fargo Faces Scrutiny for Black Marks on Ex-Employee Files

Three senators fired at Wells Fargo’s new chief executive with fresh ammunition on Thursday: the hundreds of termination notices the bank filed with an industry overseer over the last five years as employees left the company in connection with its sales scandal.

When brokers and certain other registered representatives leave a bank — voluntarily or otherwise — the company is required to file a notice with the Financial Industry Regulatory Authority, known as Finra. Called a “U5,” the form includes a field where the bank must disclose any allegations that played a role in the employee’s departure.

A negative comment on a U5 is a scorching mark that can make it almost impossible to find another job in the banking field.

“It’s like being blackballed,” said Marc Schifanelli, a lawyer who specializes in Finra arbitration. “It can be a showstopper for a career.”

Some former employees say that Wells Fargo used that power to retaliate against those who tried to blow the whistle on the bank’s fraudulent activities.

To investigate these claims, three Democratic senators asked Finra for data on Wells Fargo’s U5 filings. The responses they received “paint a disturbing picture,” the senators wrote in a letter to Timothy J. Sloan, Wells Fargo’s chief executive, on Thursday. Mr. Sloan took over from John G. Stumpf, who abruptly retired last month after intense criticism of his handling of the bank’s crisis.

The U5 forms, the senators wrote, “confirm that Wells Fargo had ample information about the scope of fraudulent sales practices” long before itreached a settlement in September with the Consumer Financial Protection Bureau.

“In addition,” the letter continued, “public reports indicate that Wells Fargo may have filed inaccurate or incomplete Form U5s for fired employees and that the bank may have done so to retaliate against whistle-blowers. If this is the case, then it would appear that Wells Fargo concealed key information from regulators.”

Read on.


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