Federal regulators said Wells Fargo employees opened accounts in customers’ names without their consent.
James Rufus Koren and Jim Puzzanghera
September 27, 2016
Wells Fargo & Co. Chief Executive John Stumpf will forfeit compensation worth about $45 million as the bank tries to appease angry lawmakers and regain the trust of customers amid the still-unfolding scandal over fake accounts.
Stumpf will give up about 910,000 shares in unvested stock awards, and will not get a bonus this year, according to a statement released late Tuesday by members of Wells Fargo’s board of directors.
Carrie Tolstedt, the executive in charge of the division where much of the activity took place, will give up about $19 million worth of stock.
Also, Wells Fargo’s board announced it has hired a law firm to investigate the bank’s sales practices. Stumpf, the chairman of the board, will recuse himself from matters related to the investigation, according to the statement.
Steven Sanger, Wells Fargo’s lead independent director, said members of the board are “deeply concerned” about the bank’s practices and will conduct its investigation “with the diligence it deserves.”
Sanger also said the investigation could lead to more executives losing stock awards or even other compensation already paid.
“The independent members of the board will take such other actions as they collectively deem appropriate,” he said.
The decision by the board comes two days before Stumpf is expected to appear before the House Financial Services Committee.
Stumpf came under heavy criticism last week when he was grilled by the Senate Banking Committee. The San Francisco banking giant has acknowledged that thousands of bank workers opened as many as 2 million checking, saving and credit card accounts for customers without their knowledge.
The bank has agreed to pay $185 million to federal regulators and the Los Angeles City Attorney’s office over the fake accounts, a practice regulators say was encouraged by an aggressive and poorly supervised sales culture.
Federal prosecutors are investigating the bank to see whether criminal charges should be filed, and the Labor Department said Tuesday that it is investigating possible labor law violations. Meanwhile, the company is facing a mounting number of lawsuits from customers, employees and shareholders, including prospective class actions seeking billions of dollars in damages.
At last week’s hearings, Sen. Elizabeth Warren (D-Mass.) called on Stumpf to step down.
“You should resign,” Warren said. “You should give back the money you took while this scam was going on, and you should be criminally investigated by the Department of Justice and the Securities and Exchange Commission.”
Warren and other senators pushed Stumpf to commit to giving back some of his pay and to claw back pay from Tolstedt.
Warren said on Wednesday that she was not satisfied with Wells Fargo’s “small step in the right direction” because it was “nowhere near real accountability.”
“Wells employees who failed to meet management’s outrageous sales goals were fired,” she said. “But John Stumpf is going to be just fine: He keeps his job and most of the millions of dollars he made while this massive fraud went on right under his nose.
To read expanded article, click here.