Wells Fargo’s cash sweep feature faces SEC investigation

(Reuters) – Wells Fargo’s cash sweep options for investment advisory clients is being investigated by the Securities and Exchange Commission (SEC), the bank disclosed in a regulatory filing.

The sweep feature allows such clients to earn a return on uninvested cash balances. The bank offers three sweep options, under which uninvested cash can be deposited into interest-bearing accounts or money market funds.

The lender has been working to fix its compliance and repair the damage from an earlier scandal over its sales practices. Its efforts, however, have at times come under renewed criticism following probes into unrelated matters.

One such matter was a hiring policy that required the San Francisco-based bank to interview a “diverse” group of people for some jobs, with half of the candidates being female or nonwhite.

The policy drew scrutiny last year following a report from The New York Times that said the bank had conducted “fake” interviews for jobs that had already been filled.

In its filing dated Tuesday, Wells Fargo said the Justice Department had closed its investigation into its hiring practices related to diversity without taking any action.

The issue, however, continues to be under the scanner of the SEC, the bank added.

The lender also remains under an unprecedented asset cap that the Federal Reserve imposed, as well as roughly a dozen consent orders with regulators.