Wells Fargo & Co. shares declined after a report that the bank is the target of a criminal investigation into whether it violated federal law by conducting fake job interviews of minority candidates to satisfy in-house diversity guidelines.
The San Francisco-based firm is being investigated by the civil rights unit of the Manhattan U.S. attorney’s office, the New York Times reported Thursday, citing people it didn’t identify who have knowledge of the matter. It isn’t clear what charges could result from such an inquiry, the newspaper wrote.
The share decline accelerated after the paper’s report. The stock fell 4.4% to $42.67 in regular New York trading, a steeper drop than the 2.4% slide by the S&P 500 Index. Wells Fargo has fallen about 11% this year.
The probe is the latest potential blow to Wells Fargo’s public image. The bank has been dealing with a series of scandals and regulatory issues for years, and is operating under a growth cap imposed by the Federal Reserve.
Wells Fargo issued a statement in response to the Times article, in which it touted diversity statistics for its workforce and hiring for executive positions. The bank didn’t mention the investigation.
“No one should be put through an interview without a real chance of receiving an offer, period,” the firm said in the statement. “The diverse slate guidelines we put in place are meant to increase diverse representation across the company and we can see meaningful results in our hiring data since 2020.”
The New York Times reported last month that current and former bank employees said supervisors in the wealth management division had instructed them to interview Black and female candidates for positions that had already been promised to someone else.
Chief Executive Officer Charlie Scharf said earlier this week that the firm had temporarily halted the use of diversity guidelines for hiring. The pause of “several weeks” will give the firm time to review the matter, Scharf wrote in a memo.
“We will continue to actively seek diversity in hiring, even during this pause,” Scharf wrote. “The pause is a chance for us to review our guidelines and processes and to make improvements — it does not mean that anyone at Wells Fargo should stop hiring or stop actively recruiting diverse candidates.”
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