Thursday, January 23, 2020 8:28:40 PM
Ex-Wells Fargo leaders face $59 million in fines over scandals
Former CEO John Stumpf agreed to a $17.5 million penalty and an industry ban
Jan 23, 2020 @ 2:42 pm
By Bloomberg News
A group of former Wells Fargo & Co. executives are facing almost $59 million in fines and bans from the U.S. banking industry over their roles in the firm’s scandals as regulators show more appetite to go after individuals.
Former Chief Executive John Stumpf agreed to a $17.5 million penalty and an industry ban, according to an order Thursday from the Office of the Comptroller of the Currency. Carrie Tolstedt, who led Wells Fargo’s community bank for a decade, faces a penalty of as much as $25 million.
“The actions announced by the OCC today reinforce the agency’s expectations that management and employees of national banks and federal savings associations provide fair access to financial services, treat customers fairly and comply with applicable laws and regulations,” Joseph Otting, the comptroller of the currency, said in a statement.
Wells Fargo tapped into public and political ire in 2016 with the revelation that bank employees opened millions of potentially fake accounts to meet sales goals. That and a slew of retail-banking issues that subsequently came to light have led to regulatory fallout that’s in many cases unprecedented for a major bank, including a growth cap from the Federal Reserve.
[Recommended video: Women anonymously describe harassment in financial services in blog series]
This is the first public step the OCC has taken against former executives related to Wells Fargo’s problems. Regulators received criticism from some corners over the fact that few individuals and no top executives were held accountable for crisis-era missteps like faulty mortgage-bond sales and unwarranted home foreclosures that cost the banks billions in fines and penalties.
Five Fighting
Mr. Stumpf was one of three to agree to consent orders and pay penalties, along with former chief administrative officer Hope Hardison and onetime risk chief Michael Loughlin.
Ms. Tolstedt and four other former executives — general counsel Jim Strother, chief auditor David Julian, audit director Paul McLinko and community banking risk officer Claudia Russ Anderson — will face a public hearing before an administrative law judge. The regulator said it could decide to increase the civil penalties based on the evidence presented.
During the OCC’s investigation, Mr. Stumpf and others admitted that the bank had systemic sales practice misconduct dating from the early 2000s. Ms. Tolstedt and Russ Anderson “asserted their Fifth Amendment right against self-incrimination and refused to answer all substantive questions about sales practice misconduct,” the regulator wrote in a notice of charges.
“We are reviewing today’s filings and will determine what, if any, further action by the company is appropriate with respect to any of the named individuals,” Charlie Scharf, who took over as Wells Fargo’s CEO in October, wrote to employees Thursday, noting the bank won’t make any remaining compensation payments to the individuals during the review. “This was inexcusable. Our customers and you all deserved more from the leadership of this company.”
Attorneys for the former executives responded to the OCC’s claims.
“Throughout her career, Ms. Tolstedt acted with the utmost integrity and concern for doing the right thing,” said Enu Mainigi, Ms. Tolstedt’s lawyer at Williams & Connolly. “A full and fair examination of the facts will vindicate Carrie.”
“At all times, Mr. Strother acted with the utmost integrity and transparency, including with the bank’s board, senior management, and its regulators,” Walt Brown, Mr. Strother’s attorney at Orrick Herrington & Sutcliffe, said in an emailed statement. “The OCC’s charges against Mr. Strother are false and unfounded, and he intends to vigorously defend against them.”
Mr. McLinko’s attorney, Timothy Crudo at Coblentz Patch Duffy & Bass, said that “The OCC’s charges have no factual nor legal support and instead are based on hindsight and second-guessing that ignore what Mr. McLinko actually knew and did. We look forward to a trial based on all of the facts, and we are confident that Mr. McLinko will be vindicated.”
Mr. Stumpf was CEO of Wells Fargo from 2007 until he retired in October 2016 amid the crisis. A report the next year conducted by law firm Shearman & Sterling on behalf of Wells Fargo’s board alleged that he reacted too slowly to warnings of sales abuses across the bank’s branch network. He forfeited $41 million in equity awards when he stepped down, and the board clawed back an additional $28 million following the Shearman & Sterling report.
Mr. Stumpf “failed to respond to numerous warning signs, including many team member complaints submitted directly to his office regarding pervasive sales pressure, fear of termination for not meeting unreasonable sales goals, and illegal and unethical sales activity across the Community Bank,” according to the OCC order he signed this week.
Regulatory actions against Wells Fargo have also included billions of dollars in fines and legal costs, and an order giving the OCC the right to remove some of the bank’s leaders. The Department of Justice and the Securities and Exchange Commission also have been investigating the lender’s issues.
The OCC and the Fed have both cited a wide-ranging pattern of abuses and lapses at Wells Fargo. The OCC drew scrutiny of its own as the firm’s main regulator throughout the scandals, prompting an internal review at the agency.
Successful Trading is the art of minimizing long term risk and maximizing capital allocation.
Recent WFC News
- Apollo Eyes $5 Billion Investment in Intel; TSMC and Samsung Explore UAE Chip Projects, and More • IH Market News • 09/23/2024 10:32:25 AM
- Wells Fargo Bank Decreases Prime Rate to 8.00 Percent • Business Wire • 09/18/2024 08:45:00 PM
- Wells Fargo Expands API Capabilities for its Commercial Banking Business • Business Wire • 09/17/2024 01:30:00 PM
- Volkswagen Financial Services U.S. and Wells Fargo announce cooperation agreement for vehicle purchase financing of Volkswagen, Audi, and Ducati brands in the United States • PR Newswire (US) • 09/16/2024 05:00:00 PM
- OpenAI Unveils Strawberry AI Model Series; Boeing Stock Falls 4% Amid Strike; HR Surges 20% on Growth Forecast • IH Market News • 09/13/2024 10:12:55 AM
- Wells Fargo Issues Statement on Agreement with OCC • Business Wire • 09/12/2024 06:08:00 PM
- Andrew Barnes Joins Wells Fargo Commercial Banking Team to Lead the Military and Veteran Segment • Business Wire • 09/12/2024 03:00:00 PM
- EBONY is Bringing the Ultimate HBCU Experience to Atlanta with Inaugural Yard Fest in Partnership with Wells Fargo and 300 Entertainment • PR Newswire (US) • 09/09/2024 01:00:00 PM
- Wells Fargo to Present at the Barclays Global Financial Services Conference • Business Wire • 09/03/2024 12:00:00 PM
- Wells Fargo Reaffirms Commitment as Official Bank Sponsor for the 2024 Orange Blossom Classic • PR Newswire (US) • 08/30/2024 12:33:00 PM
- Walmart Sells JD.com Stake, Microchip Suffers Cyberattack, Union Pacific Warns of Strike in Canada, and Latest News • IH Market News • 08/21/2024 12:12:11 PM
- Trimont Signs Definitive Agreement to Acquire Wells Fargo Non-Agency Third-Party Commercial Mortgage Servicing Business • GlobeNewswire Inc. • 08/20/2024 01:16:00 PM
- Wells Fargo Enters into Agreement with Trimont to Sell the Non-Agency Third-Party Servicing Segment of its Commercial Mortgage Servicing Business • Business Wire • 08/20/2024 01:15:00 PM
- FuboTV Soars 12% After Venu Sports Block, Goldman Sachs Lowers U.S. Recession Odds, BHP Ends Chile Strike • IH Market News • 08/19/2024 09:28:19 AM
- Wells Fargo & Company Declares Cash Dividends on Preferred Stock • Business Wire • 08/16/2024 12:00:00 PM
- ASML Rises 7% on Export Waiver; Intel Plans Layoffs, HSBC $3B Buyback Announced, and More • IH Market News • 07/31/2024 09:55:50 AM
- Bridget Engle to Join Wells Fargo as Head of Technology; Tracy Kerrins to Lead Consumer Technology and Generative AI Teams • Business Wire • 07/30/2024 08:00:00 PM
- L'ATTITUDE Partners with Wells Fargo to Celebrate the New Mainstream Economy Powered by U.S. Latinos • PR Newswire (US) • 07/30/2024 01:00:00 PM
- Toyota Reports Another Global Production Decline, Delta Sues CrowdStrike, Meta Launches AI Studio for Custom Chatbots • IH Market News • 07/30/2024 10:00:51 AM
- Wells Fargo Shares Economic Impact from Open for Business Fund • Business Wire • 07/24/2024 01:06:00 PM
- Wells Fargo & Company Increases Common Stock Dividend • Business Wire • 07/23/2024 04:15:00 PM
- Match Group Soars 8% Amid Potential Sale Pressure; Deutsche Bank Anticipates 2Q Loss, and More • IH Market News • 07/16/2024 10:10:09 AM
- Futures Pointing To Initial Strength On Wall Street • IH Market News • 07/15/2024 01:06:36 PM
- U.S. Stocks Move Back To The Upside Following Yesterday’s Downturn • IH Market News • 07/12/2024 08:44:00 PM
- Futures Pointing To Roughly Flat Open On Wall Street • IH Market News • 07/12/2024 01:08:02 PM
VHAI - Vocodia Partners with Leading Political Super PACs to Revolutionize Fundraising Efforts • VHAI • Sep 19, 2024 11:48 AM
Dear Cashmere Group Holding Co. AKA Swifty Global Signs Binding Letter of Intent to be Acquired by Signing Day Sports • DRCR • Sep 19, 2024 10:26 AM
HealthLynked Launches Virtual Urgent Care Through Partnership with Lyric Health. • HLYK • Sep 19, 2024 8:00 AM
Element79 Gold Corp. Appoints Kevin Arias as Advisor to the Board of Directors, Strengthening Strategic Leadership • ELMGF • Sep 18, 2024 10:29 AM
Mawson Finland Limited Further Expands the Known Mineralized Zones at Rajapalot: Palokas step-out drills 7 metres @ 9.1 g/t gold & 706 ppm cobalt • MFL • Sep 17, 2024 9:02 AM
PickleJar Announces Integration With OptCulture to Deliver Holistic Fan Experiences at Venue Point of Sale • PKLE • Sep 17, 2024 8:00 AM