An ex Wells Fargo & Co (NYSE: WFC) executive, Alicia Reyes, has claimed that the financial giant had an inconsistent compliance culture while its executives allegedly acted like a “mafia” to quash internal critics. The allegations are as per a recorded call filed at a U.K. court as reported by the Wall Street journal.
Reyes: Wells Fargo is ‘like a mafia’
Alicia Reyes was the chief executive of Wells Fargo’s European investment bank business and left the company in January 2020. She criticized the investment bank with an ex-Wells Fargo contractor named Ville-Valterriy Helenius who is suing Wells Fargo for unfair dismissal because he internally raised concerns about the company’s compliance dealings. In the phone call made on April 2020 speaking about the company, Ms. Reyes said:
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It’s like a mafia, literally. This place is just a scheme. There’s no intention of actually solving problems or building things. There’s just smoke and mirrors and a coverup. The pile of regulatory problems that they have is so large. There are much bigger issues that they are also sweeping under the carpet.”
Helenius recorded the phone conversation that was submitted to a United Kingdom court that focuses on employment disputes. Reyes was not aware the conversation was being recorded and the court felt it prudent to release the call to the public.
In a statement, Wells Fargo’s spokeswoman said that they denied the claims and are awaiting a verdict from the tribunal. However, she added that the lender operates within a regulatory framework, and it takes its obligations seriously.
According to the WSJ, the company has been struggling since 2016 to get over a sales-practices scandal that revealed flaws in its business culture, leading to the removal of two of its chief executes.
According to the court filing, Helenius was concerned about non-compliance with the Markets in Financial Instruments Directive II or MIFID II. The filings indicate that the bank wasn’t charging some clients enough for research, implying that it was giving inducements to clients to do business with the bank contrary to MIFID rules.
Reyes also told Helenius in the phone call that the two were “aligned” and she was “trying to solve the problems and you were helping.” This led to a “kill-the-messenger culture” as Wells Fargo allegedly approached potential whistleblowers with a “need to take him out” mentality. She said:
It’s a kill-the-messenger culture. You are in this together with thousands of other people, including me.
A Wells Fargo executive in Europe named Xavier Vanhoy told WSJ that Helenius worked with an “inflated view of his own role” and the bank denies he was unfairly dismissed. In fact, the regulatory concerns he raised were being addressed by the bank, including notifiying the appropriate authorities.