Ex-CEO of Wells Fargo fined and expelled from the profession
Former CEO of Wells Fargo banned from banking and fined $ 17.5 million.
Former Wells Fargo CEO John Stumpf Accepts Lifetime Banning From Banking Industry And $ 17.5 Million Fines For His Leadership In Fake Accounts And Other Violations Of Sales Practices.
Beyond Stumpf, Office of the Comptroller of the Currency (OCC) fined seven former Wells Fargo executives $ 40 million for what was described as «misconduct of the bank’s sales system».
Federal agency civil charges say executives "failed to properly perform their duties and bear responsibility, which led to systemic problems of the bank with improper sales behavior from 2002 to October 2016".
«These individuals’ abuses have allowed the practice to continue for years, affecting millions of bank customers and thousands of lower-level bank employees», – said in a statement by the OCC.
Wells Fargo has already paid about $ 4 billion in fines related to widespread sales schemes.
The bank admitted that its employees had opened millions of fake bank and credit card accounts. Wells Fargo admitted that it forced borrowers to pay for auto insurance they didn’t need. Some of those auto borrowers eventually got their vehicles back. Wells Fargo confesses to illegal seizure of vehicles of hundreds of military personnel.
OCC claims that senior executives knew or «should be» be aware of the problems. From December 2013 to September 2015, the bank received 5,000 customer complaints that the bank opened accounts without their consent. The bank also transferred customer funds between accounts without their approval, misled customers about its products, enabled customers to online banking without their signature, and falsified customer information.
According to OCC, Stumpf «frequently informed by managers» on the conduct of the Community Bank unit. He, in particular, did not prosecute the head of the Community Bank division, Carrie Tolstedt, and did not take any other action., «to prevent the bank from recklessly engaging in unsafe or insolvent activities».
Earlier, due to the scandal, Stumpf has already agreed to waive compensation in the amount of about $ 70 million, including a share reward..
Much of the activity occurred because employees encountered «unreasonable pressure» to meet sales targets, resulting in widespread unethical and illegal behavior.
OCC has seen many internal documents, including emails, that illustrate the intensity of the pressure Wells Fargo has put on salespeople to achieve internal goals..
Wells Fargo said it accepted government findings.
«The OCC’s actions are in line with my conviction that we must be accountable for ourselves and individuals. They are also consistent with our belief that significant parts of our Community Bank’s operating model were flawed.», – Wells Fargo’s current CEO Charles Scharf said in a statement. on Thursday. He added that the bank "will not make any remaining compensation payments that may be due to these persons while we are considering applications".
Scarf took over as CEO in October after a six-month struggle to replace former CEO Tim Sloan. Sloane held this position from late 2016 until last March, leaving Wells Fargo, which got into trouble to convince lawmakers and regulators that the bank had changed its culture significantly..
Allegations of inappropriate sales tactics and persistently low interest rates affected the bank’s financial results. Wells Fargo reported last week that fourth-quarter earnings fell 50%. Bank’s net profit more than halved to $ 2.9 billion in the last three months of 2019, compared to $ 6.1 billion in the same period a year earlier.