Pennsylvania Treasurer Timothy Reese, following several other states and issuers, has suspended Wells Fargo from treasury investment or trading activities for one year because of its fake-accounts scandal, he said Thursday.
Reese, who last month met with bank representatives, said in a statement that his office could re-evaluate Wells Fargo's status if it showed progress at improving its operations and work culture.
"As the state's financial custodian, I am very concerned about the impact of Wells Fargo's conduct on the state and our taxpayers," Reese said in a statement. "While Treasury wasn't impacted directly, the bank's actions call into question its internal controls and culture, and until the bank fixes those problems, they will not be eligible for investment or trading work with Treasury."
Bank representatives told Reese, according to the treasurer, that roughly 80,000 potentially unauthorized accounts existed in Pennsylvania of which more than 2,600 had incurred fees that have already been reimbursed.
"We value our long-term relationship with the Commonwealth of Pennsylvania and will do everything in our power to rebuild the state's trust," Wells Fargo said in a statement. "Wells Fargo will continue to serve our Pennsylvania customers and be the same committed community partner in the state where more than 6,900 of our team members live and work."
The bank said it provided more than $11.5 million in grants across Pennsylvania in 2015, including contributions to more than 1,000 nonprofit organizations.
Wells Fargo in reached a $185 million settlement with the federal government over the scandal, which forced the firing of 5,000 employees and the resignation of chief executive John Stumpf. Tim Sloan succeeded Stumpf.
The federal government's investigation is ongoing.
Last week, Northern California's East Bay Municipal Utility District suspended Wells Fargo from investment, broker-dealer and underwriter business for one year. The district provides drinking water service to 1.4 million people in a 331-square-mile territory on the East Bay side of San Francisco Bay, and wastewater service to 680,000 residents.
Other issuers that have sanctioned the bank include California, Massachusetts, Ohio and Chicago. New York City officials said they might cancel business with the bank, while the Metropolitan Transportation Authority, whose vast operations include the New York subway system, left Wells Fargo Securities off its senior managing rotation list pending an internal investigation.
Connecticut modified the lead banker for assignment for its $650 million general obligation bond sale in October, adding Morgan Stanley as co-bookrunning manager alongside Wells Fargo.
