SEC joins DOJ in probe of Wells Fargo diversity hiring practices

In a quarterly filing released Monday, Wells Fargo disclosed the SEC has undertaken “formal or informal inquiries or investigations regarding the company’s hiring practices related to diversity.” Wells Fargo announced in August that the Department of Justice is also investigating its hiring practices.

In the same filing, Wells Fargo disclosed more shareholders have joined a class-action lawsuit that alleges the company and some executive officers made “false or misleading statements” about hiring practices related to diversity. The shareholders claim the value of their stock was artificially inflated because of the actions of bank executives related to the company’s handling of its diverse candidate hiring policy.

The initial class-action complaint, filed in U.S. District Court for the Northern District of California in June, alleged Wells Fargo and its senior executives misrepresented their commitment to diversity in the workplace; conducted fake job interviews to meet diverse search requirements; subjected the bank to an increased risk of regulatory and/or governmental scrutiny and enforcement action, including criminal charges; and negatively impacted the bank’s reputation.

Wells Fargo paused its diverse candidate hiring policy in June, following a series of news reports that said executives at the bank were conducting sham interviews of minority candidates. A report from the New York Times published in May, based on interviews with current and former Wells Fargo employees, said that diverse candidates were being interviewed for jobs that had “already been promised to someone else.”

Wells Fargo announced  it had reinstated its diverse candidate hiring policy on Aug. 19, following a six-week pause. The bank said the policy requires that at least half of the candidates interviewed for certain job openings would be from diverse backgrounds and that the interviewers themselves would be diverse. The policy would apply to job openings “based on job level, not compensation.” The bank pledged to improve employee training about the policy and the monitoring of it, to ensure the policy was being implemented properly across the company.

“Wells Fargo has seen measurable increases in diverse representation over the past several years, and we believe that diverse candidate slate guidelines have been one of the many contributing factors,” said Bei Ling, Wells Fargo chief human resources officer, in the August press release. “Our review helped us to identify opportunities where we can further improve how the guidelines are implemented.”