Illinois punishes Wells Fargo over fake accounts scandal
Illinois State is suspending nearly $30bn in investment activity with Wells Fargo to punish the lender for fraudulent sales practices. Wells Fargo admitted that its employees opened millions of bank accounts in customer's names without their prior knowledge or approval to meet sales targets. This illegal action resulted in Illinois stopping certain business dealings, some of which were lucrative for the beleaguered bank. Furthermore, it has suspended any use of the lender as a dealer/broker; and put any investment in its debt securities on hold until further notice.

Illinois punishes Wells Fargo over fake accounts scandal

The State of Illinois on Monday announced it was suspending as much as $30 billion in investment activity with the embattled California lender Wells Fargo over the bank's fraudulent sales practices.

It was the second state in a week to suspend some ties with the bank, after Californian authorities announced Wednesday they were halting certain business relations with Wells Fargo for a year, including lucrative municipal bond underwriting.

Wells Fargo earlier this month publicly admitted that employees opened millions of accounts in customers' names without their knowledge in an effort to meet demanding sales targets.

Wells Fargo earlier this month publicly admitted that employees opened millions of accounts in customers' names without their knowledge in an effort to meet demanding sales targets ©Frederic J Brown (AFP)

The bank settled complaints over the accounts with US regulators and the City of Los Angeles for $185 million.

Illinois said it will suspend investment in Wells Fargo debt securities and any use of the bank as a broker/dealer.

"We have a choice where we invest taxpayer money. We will not reward companies that irresponsibly open new bank accounts and improperly repossess vehicles of members of our armed forces," Illinois State Treasurer Michael Frerichs said in a statement.

The $30 billion figure represents the value of the share of the state investment portfolio passing through Wells Fargo over a year, the statement said.

In heated hearings on Capitol Hill, US lawmakers have called for the resignation of the bank's chairman and CEO, John Stumpf, and denounced the bank for its perceived failure to hold senior management accountable.