General Views Of Wells Fargo Locations Ahead Of Earns Figures

Laura J Keller, Dakin Campbell and
Kartikay Mehrotra
Published: November 3, 2016 — 2:00 AM PDT
Updated: November 3, 2016 — 6:38 AM PDT

After Wells Fargo & Co. executive John Sotoodeh handed off more than a hundred branches in Southern California to a colleague in 2009, problems surfaced quickly.

His successor, Kim Young, addressing rumors that some employees were opening bogus accounts, called an introductory meeting with staff and warned she wouldn’t tolerate misconduct. Within a few days, managers recall, sales crumbled across her new turf.

Sotoodeh, who started as a teller in 1990, has since climbed even higher. He’s now one of three regional chiefs running the firm’s nationwide consumer-banking empire. Young spent the final years of her four-decade career at Wells Fargo weeding out bad employees, retiring in 2014.

In interviews, more than a dozen past and current Wells Fargo employees — many of them senior managers — chronicled how a generation of executives thrived in its ambitious sales culture, winning accolades and promotions, while being held aloft as examples to colleagues. All the while, people under them were opening legions of unwanted accounts for customers.

As Wells Fargo grew, some stars fanned out from Southern California, described by colleagues and in congressional testimony as a focal point of the rampant misconduct, spreading a culture that lionized boosting sales.

Firings Pending

Wells Fargo declined to make managers available for interviews but said in a statement that its leaders are closely examining the abuses and are “intently focused” on restoring customers’ trust. Many of those mentioned in this story, including Sotoodeh, referred questions to company spokesmen. Others declined to comment or didn’t respond to messages.

Company executives already have identified some current managers to be fired, according to a person with knowledge of an internal investigation. The terminations are being delayed so employees can aid inquiries, said the person, who asked not to be named discussing the matter. The person declined to specify who may be poised to lose their jobs.

No one interviewed said they heard senior executives instruct underlings to open bogus accounts, though more than a half-dozen bankers said low-level managers privately coached them to do so. More often, employees said, managers taught underlings to use misleading sales pitches — such as telling customers a checking account came with a credit card — or they balked when subordinates raised concerns. At the least, former managers say, many executives failed to stamp out misconduct for years despite ample signs it was flourishing below them as their own careers advanced.

“No one was ever penalized for doing the wrong thing until there was critical mass,” said Michael Bruns, a banker at Wells Fargo branches in Silicon Valley from 2009 to 2012. “Instead, they were promoted. They became our bosses and the people who are running the company today.”

Bruns said he was fired two months after complaining to the bank’s ethics hotline about his colleagues’ sales practices.

Broad Review

In the statement, Wells Fargo said it takes allegations such as Bruns’s seriously and will examine them thoroughly. The San Francisco-based bank has policies prohibiting retaliation for reporting suspected misconduct, and it’s conducting an “an end-to-end review” of the hotline process. The company said Thursday in a quarterly regulatory filing that the Securities and Exchange Commission is among the authorities examining its sales practices.

More broadly, the lender said it’s taking a hard look at what happened.

“The company’s leadership is intently focused on restoring trust in its community bank, making things right with customers and taking actions intended to ensure sales-practices issues do not happen again,” Wells Fargo said. “Actions have included naming a new head of retail banking, eliminating product-sales goals and changing the retail bank’s risk-management processes and protocols for customer-account activity. As we have disclosed, there are multiple investigations under way to address sales-practice issues, including by an independent committee of the board of directors. The integrity of these investigations is not served by commenting on speculation and rumor. The company will take accountability actions, as appropriate, once it has the facts necessary to act.”

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