Merkley Calls on SEC to Investigate Wells Fargo for Failures of Internal Controls

WASHINGTON, D.C. – In the wake of Wells Fargo’s scandal in which bank employees created millions of unauthorized accounts, Oregon’s Senator Jeff Merkley today called on the Securities and Exchange Commission (SEC) to open an investigation into whether the bank violated internal controls provisions of Sarbanes-Oxley by not recognizing and stopping the widespread fraud in its ranks. Merkley made his call in a keynote speech at the Center for American Progress Action Fund, headlining an event titled “Toward a Sustainable Economy” that focused on the SEC’s role in requiring transparency and disclosures that can help foster corporate growth and responsibility for the long term.

“After more than 5,000 employees have been fired for their involvement in opening fraudulent bank and credit card accounts, it’s clear there was a systemic problem at Wells Fargo,” said Merkley. “Either Wells Fargo willfully turned a blind eye, or they completely failed in their legal responsibilities to oversee their operations and to catch and stamp out fraud. Either way, the SEC must investigate without delay and demand accountability for these egregious failures.”

In his speech, Merkley expressed his deep disappointment with the leadership of current SEC Chair Mary Jo White, saying that the agency has “slow-walked Wall Street reforms required by law and resisted any initiative to rein in abuses at the most powerful corporations.”

“The next chair of the SEC must be a proven reformer,” said Merkley, “not another defender of the status quo.”

Merkley also called on the SEC to require formal disclosures from megabanks on how they are managing risk and complexity within their institutions—giving shareholders information to determine whether the financial institutions have become ‘Too Big to Manage. 

Last week, Merkley joined colleagues in calling for a Banking Committee hearing on the Wells Fargo scandal and asking Wells Fargo whether it will revoke massive bonuses to the executive in charge of the unit creating fake accounts.

The Banking Committee heeded the call for hearings, and will hold a hearing beginning at 10am ET this morning.