Wells Fargo & Co., already in the regulatory spotlight because of last year's fake-account scandal, is drawing renewed scrutiny after a lawyer's unauthorized release of sensitive client details for tens of thousands of accounts belonging to wealthy customers of its brokerage unit.
Regulators have started asking questions about the release, according to a person with knowledge of the matter, after the data was mistakenly provided to an attorney as part of a lawsuit involving two brothers, one a Wells Fargo employee and the other a former employee. A person briefed on the matter said Wells Fargo has determined the accounts were all from one brokerage branch in the Northeast.
Representatives of the Financial Industry Regulatory Authority informally contacted at least one of the attorneys involved in the dispute for information about how the release occurred and how Wells Fargo failed to detect it, said the person, who asked not to be identified because the matter isn't public. Lawyers for the bank are taking steps to contact regulators about the data release, according to another person with knowledge of the matter. The person didn't specify which agencies.
Ray Pellecchia, a spokesman for Finra, which licenses and supervises Wall Street workers including financial advisers, didn't have an immediate comment. Judith Burns, a spokeswoman for the Securities and Exchange Commission, declined to comment. Representatives for the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency didn't immediately respond to messages seeking comment.
'Thoroughly Investigate'
While this latest black eye may not rise to the level of the retail-bank debacle, it further calls into question Wells Fargo's ability to manage its people and information.
"Wells Fargo takes the security and privacy of our customers' information very seriously," the bank said in a statement. "We are currently taking legal action to ensure the additional data is not disseminated, and we are requesting its rapid return. We continue to thoroughly investigate this matter and will take the proper steps, including corrective action, based on the outcome of our investigation."
The bank's latest troubles come just 10 months after regulators disclosed that Wells Fargo employees had been opening potentially millions of accounts in its retail banking division without customers' permission over a half decade. The bank's stock valuation and reputation were tarnished, and Wells Fargo has spent at least $520 million on fines, remediation, consultants and civil litigation since then, including a near-final $142 million to consumers who accused the bank of creating bogus accounts.
Insufficient Oversight
The OCC, the bank's main regulator, said in September Wells Fargo had "failed to provide sufficient oversight" of its sales programs and didn't adequately monitor employees in its retail bank. Part of the consent order the OCC forced the bank to carry out afterward included beefing up internal controls and risk management.
