The Department of Justice (DOJ) has launched an investigation into Wells Fargo's "hiring practices related to diversity," the bank revealed in a regulatory filing on Monday.
The bank claimed that the DOJ and other governmental bodies had " “undertaken formal or informal inquiries or investigations" into its hiring practices in a quarterly filing with the Securities and Exchange Commission. Furthermore, Wells Fargo acknowledged a securities fraud class action lawsuit it is facing, in which it is alleged that the firm and a few executive officers made "false or misleading statements" about their hiring practices in terms of diversity.
In 2020, Wells Fargo expanded its diverse slate hiring policy, which required "at least 50 percent of interview candidates must represent a historically underrepresented group" for most roles in the United States with compensation greater than $100,000 per year, according to the class-action lawsuit filed in June in U.S. District Court for the Northern District of California.
However, a May report from the New York Times claimed that the policy was a fraud. Joe Bruno, a former executive in the bank's wealth management division, claimed in the report that diverse candidates would be interviewed for jobs that had "already been promised to someone else." The report cited conversations with current and former Wells Fargo employees.
According to the report, Bruno was later let go for "complain[ing] to his bosses about the practice."
Just before federal prosecutors launched an inquiry into the company's hiring practices in June, Wells Fargo reportedly suspended the policy, according to a Reuters report citing an internal memo.
According to the class-action lawsuit, Wells Fargo and a few executive leaders "failed to disclose material adverse facts about the company’s business, operations, and compliance policies" and made "materially false and misleading" statements about their hiring practices.
The complaint specifically accuses Wells Fargo and its senior executives of the following:
Misrepresented their commitment to diversity in the workplace;
Conducted fake job interviews to meet diverse search requirements;
Subjected the bank to an increased risk of regulatory and/or governmental scrutiny and enforcement action, including criminal charges; and
Negatively impacted the bank’s reputation.
According to an internal memo cited by the New York Times on Monday, Wells Fargo has since reinstated its diverse slate hiring policy. Executives found the policy to be "overly prescriptive," which was one issue they found.
By fLEXI tEAM