Illinois State Treasurer Michael Frerichs said Monday that his office will suspend investment activity with Wells Fargo in light of the bank’s ongoing fraud scandal and investigation, USA Today reports.
"Wells Fargo is a big financial player in Illinois, and I hope to send the message that their unscrupulous practices are not welcomed and will not be tolerated," Frerichs said during a news conference.
Frerichs said that his office handles more than $1 trillion in transactions annually, and Wells Fargo stands to lose “millions of dollars” in investment fees because of the action.
The loss of business in Illinois is the latest blow to the bank, which last month agreed to a $185 million settlement after it admitted that employees had opened as many as 2 million fraudulent accounts in the names of unsuspecting current customers. The bank fired 5,300 employees, and its CEO, John Stumpf, has been grilled by Senate and House committees looking into the scandal. Stumpf has agreed to give up $41 million in unvested stock awards.
Last week, California Treasurer John Chiang said that his state would suspend several key banking relationships with Wells Fargo, and New York's Metropolitan Transit Authority opted not to include Wells Fargo among the banks preauthorized for writing bonds.
Frerichs said that Illinois will also audit all other business it does with Wells Fargo.
Wells Fargo has worked with the state of Illinois as well as the city of Chicago since 1970 through its government and institutional banking division, which is separate from its retail bank.
“We certainly understand the concerns that have been raised," Wells Fargo said in a statement. "We are very sorry and take full responsibility for the incidents in our retail bank. We have already taken important steps, and will continue to do so, to address these issues and rebuild the state’s and city’s trust.”
Read more at USA Today.
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