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Wells Fargo admits to 70 percent more potentially fake accounts

CNBC logo CNBC 8/31/2017 Liz Moyer
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Wells Fargo said Thursday it uncovered nearly twice as many potentially unauthorized consumer and small-business accounts than originally thought after an independent investigation into a sales scandal that erupted last year.

The disclosure marks the conclusion of that investigation, the bank said. Earlier this month, Wells Fargo CEO Timothy Sloan warned his employees to brace for more negative headlines, saying the review by an outside firm could reveal a "significant increase" in the number of accounts involved.

On Thursday, the bank said the review of 165 million retail accounts opened from January 2009 to September 2016 identified 3.5 million as potentially unauthorized. That is up from the 2.1 million accounts originally identified in a narrower review that only covered 93.5 million accounts opened from May 2011 to mid-2015.

Sloan said on a conference call early Thursday morning that the bank was now focused on remediation for customers, adding that it cast a wide net in the review and that some of the accounts identified may have been opened legitimately. 

"To rebuild trust and to build a better Wells Fargo, our first priority is to make things right for our customers, and the completion of this expanded third-party analysis is an important milestone," Sloan said.

On Wednesday, billionaire investor Warren Buffett told CNBC that when one puts a spotlight on a large financial institution like Wells Fargo, they're likely to find something.

"What you find is there's never just one cockroach in the kitchen when you start looking around," the chairman and CEO of Berkshire Hathaway said on "Squawk Alley."

Berkshire is Wells Fargo's largest shareholder, holding a 9.4 percent stake.

"Anytime you put focus on an organization that has hundreds of thousands of people ... you may very well find that it wasn't just the one who misbehaved that you find out about," Buffett said.

Wells said the investigation was covered by a third party firm, which identified 2.55 million potentially unauthorized accounts from the original four-and-a-half year time frame plus another 981,000 accounts in the expanded, eight year period.

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