Wells Fargo fund business on the defensive amid sales scandal
By Tim McLaughlin
(Reuters) - When a scandal over unauthorized accounts rocked Wells Fargo & Co's (WFC.N: Quote) retail division last fall, executives at its asset management arm sprang into action to limit its fallout at an already tough time for their business.
A Reuters' review of minutes from about two dozen state and municipal pension board meetings across the country from October to December showed Wells Fargo wealth management executives offering apologies, weighing fee cuts and emphasizing their own controls on staff hiring and vetting.
Joe Ready, head of Wells Fargo's institutional retirement plan business, for example, told trustees of the city of San Diego's defined contribution plan that participants' $1 billion in assets were walled off from other parts of Wells Fargo.
Last September, the bank said it reached a settlement with the authorities over findings that its branch staff opened up to 2 million unauthorized customer accounts.
"Mr. Ready apologized for any inconveniences the recent incident has caused. Mr. Ready confirmed that the retirement plan accounts are not impacted by the recent events," according to minutes of the Oct. 6 meeting published on the city's website.
San Diego pension officials declined to comment for this story. Wells Fargo declined to make Ready available and said it would not comment on its interactions with specific clients, but said in a statement:
"We certainly understand the concerns about what happened in our community bank and have been in regular dialogue with our investor clients regarding the settlement," the bank said.
It is difficult to determine the scandal's precise business impact. Like other fund managers, Wells Fargo is grappling with the seismic shift of money into funds that track indices. Even before the scandal erupted investors had been pulling money out of its funds. Continued...