A Tough Week for Banks Hounded by Scandals and Politics
Wells Fargo, Societe Generale and others haven't had it easy this week.
October 05, 2017 at 05:00 PM
3 minute read
It has been a rough week for several major banks around the world. Wells Fargo & Co. suffered a triple whammy of problems this week, while French prosecutors were investigating Paris-based Societe Generale over possible money laundering, and Spain's Banco Sabadell and CaixaBank were caught up in the political turmoil in their home region of Catalonia.
First Wells Fargo's CEO, Timothy Sloan, was grilled Tuesday in Washington, D.C., by a U.S. Senate banking panel over past scandals. Some senators also berated him for using forced arbitration to quietly settle disputes with customers rather than allowing them to sue the bank, which would make the disputes public.
The state of California did more than talk. Gov. Jerry Brown Wednesday signed into law a measure that prohibits financial firms from forcing customers into arbitration over disputes involving bank fraud. The law was inspired by San Francisco-based Wells Fargo's misdeeds.
The week's third strike against Wells Fargo came Thursday when the bank agreed to refund millions of dollars in fees that were wrongly assessed to mortgage borrowers from 2013 through February 2017.
A company statement acknowledged that borrowers were charged millions of dollars in rate-lock extension fees “in cases where the company was primarily responsible for the delays that made the extensions necessary.” The bank said in August that the Consumer Financial Protection Bureau was investigating the rate-lock fee matter.
Meanwhile in France, the New York Times reported this week that French prosecutors were investigating Societe Generale for possible anti-money laundering violations. The Times said investigators are looking at the role SocGen played in the transfer of $2 million that allegedly was paid as a bribe to ensure Rio de Janeiro won the right to host the 2016 Summer Olympics.
The office of New York-based Laura Schisgall, SocGen general counsel/America, forwarded a statement from the bank, saying SocGen doesn't comment on individual cases.
The statement said, “Societe Generale is subject to comprehensive AML and KYC [know your customer] regulations and complies with industry standards. The [SocGen] Group considers the fight against corruption and money laundering as a top priority.”
In neighboring Spain, it's politics and not fraud that's threatening banks. The newspaper El Mundo reported that the directors of Banco Sabadell, the country's fifth largest bank, voted Thursday afternoon to move its headquarters from Catalonia to Alicante.
The Catalan region has been racked with violence since separatists won last weekend's vote to declare independence from Spain. The Spanish government has said the vote was suspect.
The newspaper said Spain's leading retail bank, CaixaBank, also is considering a move. It is looking at going to the Balearic Islands from its base in Barcelona, which is the capital of Catalonia and the site of much of the violence.
Both banks have suffered recent drops in stock value blamed on the independence movement.
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
NOT FOR REPRINT
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View AllFormer Capital One Deputy GC Takes Legal Reins of AIG Spinoff
Class Certification, Cash-Sweep Cases Among Securities Litigation Trends to Watch in 2025
6 minute readEx-Six Flags CLO Lands New C-Suite Post—This Time as HR Chief
After 2024's Regulatory Tsunami, Financial Services Firms Hope Storm Clouds Break
Trending Stories
Who Got The Work
J. Brugh Lower of Gibbons has entered an appearance for industrial equipment supplier Devco Corporation in a pending trademark infringement lawsuit. The suit, accusing the defendant of selling knock-off Graco products, was filed Dec. 18 in New Jersey District Court by Rivkin Radler on behalf of Graco Inc. and Graco Minnesota. The case, assigned to U.S. District Judge Zahid N. Quraishi, is 3:24-cv-11294, Graco Inc. et al v. Devco Corporation.
Who Got The Work
Rebecca Maller-Stein and Kent A. Yalowitz of Arnold & Porter Kaye Scholer have entered their appearances for Hanaco Venture Capital and its executives, Lior Prosor and David Frankel, in a pending securities lawsuit. The action, filed on Dec. 24 in New York Southern District Court by Zell, Aron & Co. on behalf of Goldeneye Advisors, accuses the defendants of negligently and fraudulently managing the plaintiff's $1 million investment. The case, assigned to U.S. District Judge Vernon S. Broderick, is 1:24-cv-09918, Goldeneye Advisors, LLC v. Hanaco Venture Capital, Ltd. et al.
Who Got The Work
Attorneys from A&O Shearman has stepped in as defense counsel for Toronto-Dominion Bank and other defendants in a pending securities class action. The suit, filed Dec. 11 in New York Southern District Court by Bleichmar Fonti & Auld, accuses the defendants of concealing the bank's 'pervasive' deficiencies in regards to its compliance with the Bank Secrecy Act and the quality of its anti-money laundering controls. The case, assigned to U.S. District Judge Arun Subramanian, is 1:24-cv-09445, Gonzalez v. The Toronto-Dominion Bank et al.
Who Got The Work
Crown Castle International, a Pennsylvania company providing shared communications infrastructure, has turned to Luke D. Wolf of Gordon Rees Scully Mansukhani to fend off a pending breach-of-contract lawsuit. The court action, filed Nov. 25 in Michigan Eastern District Court by Hooper Hathaway PC on behalf of The Town Residences LLC, accuses Crown Castle of failing to transfer approximately $30,000 in utility payments from T-Mobile in breach of a roof-top lease and assignment agreement. The case, assigned to U.S. District Judge Susan K. Declercq, is 2:24-cv-13131, The Town Residences LLC v. T-Mobile US, Inc. et al.
Who Got The Work
Wilfred P. Coronato and Daniel M. Schwartz of McCarter & English have stepped in as defense counsel to Electrolux Home Products Inc. in a pending product liability lawsuit. The court action, filed Nov. 26 in New York Eastern District Court by Poulos Lopiccolo PC and Nagel Rice LLP on behalf of David Stern, alleges that the defendant's refrigerators’ drawers and shelving repeatedly break and fall apart within months after purchase. The case, assigned to U.S. District Judge Joan M. Azrack, is 2:24-cv-08204, Stern v. Electrolux Home Products, Inc.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250