The US Securities and Exchange Commission (SEC) has charged Wells Fargo Clearing Services and Wells Fargo Advisors Financial Network for imposing excessive advisory fees.

The American financial services company overcharged more than 10,900 investment advisory accounts over $26.8m in advisory fees.

Wells Fargo imposed excessive fees on certain clients who opened accounts prior to 2014 for advisory fees through the end of December 2022.

It has agreed to pay a $35m civil penalty to settle the US federal government agency’s charges.

The SEC’s order states that certain financial advisers from the financial services company and its predecessor firms agreed to lower the firms’ pre-set advisory fees for certain clients and amended it on the clients’ investment advisory agreements to reflect the reduced fees.

However, in certain cases, the account processing employees at Wells Fargo and its predecessor firms failed to enter the reduced advisory fee rates into the firms’ billing systems while setting up the clients’ accounts.

Besides, Wells Fargo did not adopt and implement written compliance policies and procedures to check if the billing systems had accurate data and

It also failed to prevent the overbilling of the clients that the firm acquired through its predecessor firms and certain of its own new clients.

SEC Enforcement Division Director Gurbir Grewal said: ”For years, Wells Fargo and its predecessor firms negotiated reduced advisory fees with thousands of clients, but failed to honour them, overcharging those clients millions of dollars as a result.

”Today’s enforcement action underscores the need for firms growing their businesses through acquisition to ensure that their growth does not come at the expense of client protection.

“Investment advisers must adopt and implement policies and procedures to ensure that they honour their agreements with all of their clients, including legacy clients of predecessor firms.”

The SEC said the financial services company settled without admitting or denying the charges.

Wells Fargo paid affected accountholders nearly $40m, including interest to reimburse them for the excessive fees.

It has also agreed to a cease-and-desist order and censure, said the government agency.