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Wells Fargo Disputes WSJ Story on FX Mark Ups

Wells Fargo has issued a statement in which it “strongly disputes” the characterisation of its foreign exchange pricing as being unfair and unfavourable to its customers, as alleged in a story published by The Wall Street Journal on November 28.

“We informed The Wall Street Journal that their story had fundamental inaccuracies before they published,” says Wells Fargo Wholesale Banking head Perry Pelos. “We provided pricing data and other information that revealed inaccuracies in the story or that were counter to its negative portrayal of our FX business. Our points and views were either absent in the finished story or not taken seriously by the paper.”

The Journal story revealed that an internal investigation into its charging policies for clients executing FX transactions indicated that Wells Fargo only charged the quoted fee in 35 of roughly 300 transactions. It also alleged the bank charged customers between one and four percent on transactions.

Last month, four senior executives in the bank’s FX business were dismissed following an internal investigation.

In a statement Wells Fargo says it “takes issue” with the assertion that an internal review showed that out of roughly 300 fee agreements only about 35 companies were charged the actual price they had been offered for currency trades, claiming this is “factually incorrect”.

It says that no internal review leading to that conclusion was conducted by the business. “The paper’s characterisation appears to be tied to unnamed sources and an alleged conference call referenced in the story’s opening that could not be verified by our company as having occurred,” the bank states.

It also refutes aspects of the claim the bank charged higher than standard fees, saying that it explained to The Journal that wider-spread outcomes are not uncommon in smaller and lower volume FX transactions, depending on transaction size and type. “Such spreads are not reflective of pricing on the full range of transactions, however. Wells Fargo confirmed that the weighted average spread in 2016 for all of its middle market transactions was 18 basis points, which is within the lower end of the middle market range of 15 to 50 basis points cited by the paper,” the bank states. “Further, The Journal elected to use a misleading graphic, which showed industry average fees, but disregarded the weighted average volume for Wells Fargo middle market fees, which were provided to the paper. This resulted in an unfair comparison.

Wells Fargo also says that the ringing of a bell in the dealing room whenever a major sales transaction was completed “has not occurred for more than a decade in our FX business”, however it did not deny that it used to take place.

“While we have made some mistakes in the past, we always work to make it right for our customers, and invite them to reach out to us if they have any issues. But, in our view, the article’s characterization of our overall business practices and commitment to our FX customers is misleading and unfair,” says Wells Fargo CEO and president Tim Sloan. “We proudly serve thousands of customers in our foreign exchange business and are committed to helping them succeed.”

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Colin Lambert

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