Wells Fargo raises reserves after saying SEC is probing its sales practice disclosures


Wells Fargo announced it is raising its reserves and adding the Securities and Exchange Commission to the list of federal and state agencies that are investigating its sales practice disclosures, the bank said in a Thursday filing.

As of Sept. 30, Wells Fargo said the high end of reasonably possible litigation losses approached $1.7 billion, above reserves. The bank previously saw only $1 billion in possible litigation losses above reserves.

A spokesman for Wells Fargo declined to comment on the filing, but emphasized that the bank "is committed to restoring trust with customers and all of its key stakeholders."

On Wednesday, The Wall Street Journal reported, citing sources, that the SEC was probing the bank's sales practices.

The investigation is in its early stages, but the SEC has requested documents from the bank in recent weeks, people familiar with the matter told the newspaper. Those documents are related to Wells Fargo's recent sales practice scandal.

The SEC declined to comment to CNBC.

The development comes on the heels of a sales scandal in which as many as 2 million accounts were opened without customer authorization. Former CEO John Stumpf retired amid questions about the bank's sales practices, which resulted in $185 million in penalties.

The bank has taken a number of steps to "make things right for customers," a company spokesman said. For example, Wells Fargo has refunded $2.6 million to customers for fees related to unauthorized accounts and has eliminated product sales goals in its retail banking business.

The spokesman said that Wells Fargo has voluntarily expanded the scope of its customer account review and remediation to include 2009 and 2010. The bank has tapped independent consulting firm PricewaterhouseCoopers to conduct these reviews.

Wells Fargo said on Thursday that in addition to imposing financial penalties, regulators may require admissions of wrongdoing.

In late September, Sens. Elizabeth Warren, Jeff Merkley, and Bob Menendez called on the SEC to investigate the bank to determine whether it "violated laws by misleading investors and firing whistleblowers while the bank oversaw the creation of millions of unauthorized, fraudulent accounts."

Independent directors of the board have retained the law firm of Shearman & Sterling to assist in its investigation into its sales practices, Wells Fargo said.

Read the full report on The Wall Street Journal.