The Securities and Exchange Commission is investigating the cash sweep options Wells Fargo provides to investment advisory clients at account opening, the bank disclosed in a regulatory filing on Tuesday.
Wells Fargo Advisors offers a sweep feature with three options for clients to earn a return on uninvested cash balances in their accounts, according to information listed on the bank’s website.
The cash sweep options include a standard bank deposit sweep, expanded bank deposit sweep and a money market fund sweep. Eligibility is based on the type of investment account and nature of account ownership, according to the bank.
The San Francisco-based firm did not share additional details about the nature of the SEC investigation in its filing on Tuesday. Wells Fargo did not immediately respond to Banking Dive’s request for comment.
The SEC investigation adds to the laundry list of regulatory scrutiny the bank has come under in recent years.
The lender, which is still working to repair an image damaged by the highly publicized fake accounts scandal that came to light in 2016, has most recently faced criticism over its diverse hiring practices.
About a dozen current and former employees of the bank told The New York Times in May 2022 that Wells Fargo held phony job interviews for nonwhite and female job-seekers for positions that had already been offered to other candidates.
The Department of Justice closed its investigation into Wells Fargo’s hiring practices without taking action, while the SEC is still investigating the matter, the bank also disclosed in its filing on Tuesday.
Meanwhile, Wells Fargo is still operating under a $1.95 trillion asset cap the Federal Reserve placed on the bank in 2018.
