A federal criminal probe of Wells Fargo & Co.’s foreign-exchange sales practices has halted a wrongful firing lawsuit by a former head of the bank’s foreign-exchange trading group.
A San Francisco state judge on Friday put the 2018 complaint by Simon Fowles on hold until mid-December at the request of prosecutors in the Manhattan U.S. attorney’s office amid an investigation into matters related to the $4 billion transaction at the heart of the case.
Wells Fargo has disclosed that the Justice Department is investigating its foreign exchange business, including whether customers may have received pricing inconsistent with commitments made. The bank noted in a regulatory filing that previous investigations by other government agencies have been resolved.
Ancel Martinez, a spokesman for Wells Fargo, declined to comment on whether the investigation in the Fowles case is the same one the bank disclosed. A spokesman for the Manhattan U.S. attorney’s office didn’t reply to an email after regular business hours.
In August 2014, Wells Fargo traders bought $4 billion worth of Canadian dollars as part of Burger King’s $12.5 billion purchase of Tim Hortons, the Canadian restaurant chain. Questions later arose about whether Wells Fargo had conducted the transaction properly.
Fowles claims in his suit that because of the size of the transaction — supposedly the largest ever for Wells Fargo’s foreign exchange team — Burger King was quoted an “at-worst” price for the entire $4 billion and was due to receive an even split with the bank from any improvement on the ultimate price.
In his complaint two and a half years ago, Fowles said the Justice Department was looking into whether Wells Fargo “may have generated additional revenue from the transaction that should have been shared with the customer.”
Fowles, who climbed the management chain from 1996 to 2017, alleges he made multiple complaints to his own managers about potential fraud and regulatory violations. But he was fired in October 2017 along with three other traders involved in the deal, according to his suit.
Wells Fargo has denied Fowles’s claims. The bank said at the time that the terminations of the four traders related to a “transaction for a single client” and that their departure wasn’t tied to issues involving market collusion or manipulation.
The case is Fowles v. Wells Fargo Bank N.A., 18-565709, California Superior Court, San Francisco County.
— With assistance by Hannah Levitt
Source: Read Full Article