(Bloomberg) -- Wells Fargo, which has set aside the least money for legal costs among the four biggest U.S. banks, will conduct an internal review of its ethics as the industry grapples with a surge in probes and lawsuits.

The analysis led by Christine Meuers, a deputy general counsel, will examine standards for how employees should act and procedures for handling conflicts of interest across more than 80 business lines, said Mary Eshet, a spokeswoman for the San Francisco-based bank. The review will start Jan. 1 and last 18 to 24 months, Eshet said.

Lenders in the U.S. and Europe are looking to head off regulatory scrutiny and legal challenges that have tarnished reputations and sapped billions of dollars in profit. Frankfurt- based Deutsche Bank AG said yesterday it hired a McKinsey & Co. risk specialist to bolster controls. JPMorgan Chase increased spending on internal oversight this year and assigned thousands of people to compliance roles.

Wells Fargo’s review will be handled by the newly formed Ethics Program Office, Eshet said. The lender, run by Chief Executive Officer John Stumpf, 60, has no plan to issue a report once the task is completed, Eshet said.

“Wells Fargo has long had a strong code of ethics which has served us well, and ethical business practices are a cornerstone of our culture,” she said in an e-mailed statement. The review “is a self-initiated effort that builds on our strong track record of ethics and integrity to assess our current approach and make recommendations for continuous improvement.”


The firm’s employees already are held to a 24-page code of ethics. For example, workers are barred from investing in or making a loan to a Wells Fargo customer or vendor unless it meets certain conditions, the document shows. Employees aren’t allowed to accept gifts valued at more than $200 from customers, subject to some exceptions.

Financial-industry business practices drew congressional scrutiny, lawmaker criticism and public protests in the years after the 2008 credit crisis fueled investor losses and triggered a recession that drove U.S. unemployment to 10%. A movement known as Occupy Wall Street spread across the U.S. and abroad in 2011, criticizing the wealthiest people and bankers in particular. Last year, President Barack Obama ordered the formation of a task force to look for deception in the creation and sale of mortgage-backed securities.


Goldman Sachs Group started a business standards committee in May 2010 after the U.S. SEC sued the company for fraud. In creating the group, CEO Lloyd C. Blankfein, 59, said the New York-based bank recognized “a disconnect between how we view the firm and how the broader public perceives our roles and activities.”

Goldman Sachs’s report, published in January 2011, made 39 recommendations to restore the firm’s reputation and win client trust. Among the changes, the investment bank altered the way it discloses financial information. The company also settled the SEC claims, saying it made a “mistake” in disclosures while selling a mortgage-linked investment that soured.

Wells Fargo probably hopes its review will improve the company’s standing with regulators and the public, said Nell Minow, founder and a director of GMI Ratings, which evaluates governance risks at public companies.


“There are two reasons a bank would do this,” she said. “The more they can do to create credibility with regulators, the less regulators will feel like they have to come in and tell them what to do. The other is for their brand: with their own employees, their customers, the community. They understand that for commercial and political reasons this is absolutely essential.”

The bank’s culture allows top executives to raise concerns they may have about business practices, Stumpf said at an investor conference today in New York.

“Every Monday morning I have my 10 direct reports come in and we talk about our businesses,” Stumpf said in response to a question about the review. “Anything goes and anybody has a right to opine on anybody else’s business, so we do review as part of that.”

Wells Fargo garnered an “about average” rating from customers in 2013 rankings for U.S. retail-banking satisfaction by J.D. Power & Associates. New York-based Citigroup Inc. drew the same, while JPMorgan attracted a “better than most.” Charlotte, North Carolina-based Bank of America Corp. ranked among “the rest,” according to the survey.


Wells Fargo, whose investment-banking operations were dwarfed by those of other large firms heading into the crisis, has avoided some claims faced by rivals. The bank set aside $2.7 billion for litigation and legal matters from 2008 through June, according to data compiled by Bloomberg. That compares with $21.3 billion at JPMorgan, $19.1 billion at Bank of America and $8.1 billion at Citigroup, according to the data.

JPMorgan, the largest U.S. lender and a target of at least eight Justice Department investigations, halted a social-media campaign last month after Twitter users, invited to send questions to an executive, responded with sarcastic posts about the bank’s legal woes.

The bank increased spending on internal controls by about $1 billion this year and dedicated more than $750 million “to address several of our consent orders” with regulators, CEO Jamie Dimon said in September. At least 5,000 people at the New York-based company have been assigned to compliance, he said.


U.S. banks are facing additional compliance requirements. Five agencies are set to complete the Volcker rule today, imposing curbs on trading and investing while also requiring CEOs to “annually attest in writing” that their firms have procedures for following the rules.

Wells Fargo’s Meuers, who has worked at the bank or its predecessor for 18 years, has been involved with the company’s code of ethics for that entire time, Eshet said. Based in Minneapolis, Meuers will have a small staff and report to Hope Hardison, head of corporate human resources, Eshet said.

Meuers currently leads a team responsible for overseeing transactions related to subjects such as corporate governance, securities law, and mergers and acquisitions, according to a biography posted on the website for the Women, Influence &

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