HARTFORD, Conn. – Massachusetts became the latest state to sanction Wells Fargo over its fake-accounts scandal, with state Treasurer Deborah Goldberg removing the investment bank from its list of approved underwriters for one year.
Goldberg, who instructed the assistant treasurer for debt management to make the move against Wells Fargo Securities, also instructed staff to review contracts, investments, or any other relationships that Massachusetts may have with the bank, she said in a statement Tuesday. The commonwealth's exposure, she added, is limited compared with other states.
"Wells Fargo has treated their employees, their customers, and the general public in a completely reprehensible fashion," said Goldberg. "When we have a clear picture, we will take all appropriate actions."
Massachusetts follows Ohio as the most recent states to punish Wells Fargo for business practices that incentivized employees to create fake or unauthorized accounts to generate fee revenue. The Consumer Financial Protection Bureau fined Wells Fargo $185 million over 2 million bank and credit card accounts that customers may not have authorized.
Chief executive John Stumpf resigned and the federal government fined the bank $185 million. In addition, more than 5,000 employees were fired. The federal investigation is ongoing.
Chicago, California and Illinois made similar moves, while New York City said it is re-evaluating its relationship with Wells Fargo. The Metropolitan Transportation Authority, which operates New York's subways, buses and commuter rail systems, put its approval of the bank as a rotating senior manager on hold pending an internal review.
Connecticut Treasurer Denise Nappier added Morgan Stanley as co-manager along with Wells Fargo Securities for a recent $650 million sale of general obligation bonds and GO green bonds.
"We value the commonwealth of Massachusetts' business and will work to earn it back," Wells Fargo said in a statement, citing its 1,300 employees in the state and $1.7 million in 2015 charitable contributions. "Wells Fargo manages its business with the state in business lines that are separated from our retail bank: Wells Fargo Securities, which provides the state with efficient access to U.S. capital markets, and government and institutional banking, which provides banking and capital markets solutions to states and local governments and related agencies."
