WFC Wells Fargo and Company

By Emily Glazer 

Wells Fargo & Co. has fired four foreign-exchange bankers amid an investigation into that business by both the bank and regulators, according to people familiar with the matter and the bank.

The firings and investigation are the latest problem to hit Wells Fargo, which has been grappling for the past year with the fallout from its sales-practices scandal. This summer, the bank disclosed that a review of its businesses in the wake of that scandal had also revealed problems related to improperly charging customers for certain auto insurance and mortgage products.

The bank's issues, though, had mostly been confined to the retail-banking business. The foreign-exchange investigation now shows there is also trouble in Wells Fargo's investment-banking arm. The issues have emerged separate from a review of business practices in the wake of the sales-practices scandal, according to a person familiar with the matter.

A Wells Fargo spokeswoman confirmed the firings after inquiries from The Wall Street Journal.

Separately, the Office of the Comptroller of the Currency earlier this week sent a confidential report to Wells Fargo about the auto-insurance product issues. That said the bank may need to refund to customers more than the $80 million the bank had previously cited, according to a person familiar with that matter.

The foreign-exchange firings come just weeks after Wells Fargo chief Timothy Sloan was castigated during a Senate Banking committee hearing for the bank's conduct and culture, such as how problems happened for many years and why more wasn't done to stop them. Sen. Elizabeth Warren (D., Mass.) said more had to be done at the bank in light of recent problems that have emerged and she called for Mr. Sloan's firing.

Mr. Sloan defended the bank and its handling of problems, pointing to a number of changes he has made over the past year in the operations of the retail-banking business.

It isn't yet clear what issues drove the firings in Wells Fargo's foreign-exchange business. But the bankers involved were fired for cause, according to a person familiar with the matter.

The terminations occurred as the bank is conducting an internal investigation and as federal regulators have been examining practices in the business, according to a person familiar with the matter.

Those fired, the people said, were Simon Fowles, recently head of foreign exchange trading; Bob Gotelli, recently head of foreign exchange sales; Jed Guenther, recently a regional head of foreign exchange; and Michael Schaufler, chief spot dealer.

The bankers didn't immediately respond to requests for comment or declined to comment.

The prior head of the foreign exchange group, Sara Wardell-Smith, was moved to a different role at the bank, the people said. Ms. Wardell-Smith's LinkedIn profile refers to a role beginning in October leading part of Wells Fargo's financial institutions group. She had held several roles in the bank's foreign-exchange group after joining Wells Fargo in 1995 and led the group for the past decade.

Ms. Wardell-Smith didn't respond to requests for comment.

The bank spokeswoman said Ms. Wardell-Smith accepted a new position as Americas regional leader in Wells Fargo's financial institutions group. She added that the bank's foreign-exchange business "will continue to serve our clients under the leadership of Ben Bonner."

Wells Fargo's investment-banking, securities and markets division, known as Wells Fargo Securities, is a fraction of the size of its U.S. big-bank peers. Its U.S. investment-banking market share is just about 4% as of September, according to research firm Dealogic.

And Wells Fargo's foreign-exchange desk doesn't do as much business as other banks, industry participants have said. Wells Fargo doesn't break out financial results or metrics for that group.

Unlike many other big banks, Wells Fargo's foreign-exchange operations weren't caught up in investigations into collusion between market participants to move foreign-currency rates for their own financial benefit. Those investigations led to more than $5 billion in combined penalties at U.S. and European banks and a guilty plea to criminal charges.

In regard to the retail-bank problems, the report sent to the bank by the OCC this week said Wells Fargo was too slow to identify and correct problems related to auto-insurance products known as collateral protection insurance, a person familiar with the matter said. The OCC report was first reported by the New York Times.

The OCC did acknowledge that the bank has ended the auto-insurance practices, changed management and restructured the group responsible for the sales.

An OCC spokesman declined to comment on ongoing supervisory matters.

Another Wells Fargo spokeswoman reiterated that the bank discontinued the product at issue.

"We will continue to work with regulators on the remediation and will make improvements to our auto lending business," the spokeswoman said.

Write to Emily Glazer at emily.glazer@wsj.com

(END) Dow Jones Newswires

October 20, 2017 13:21 ET (17:21 GMT)

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