Federal bank watchdog charges five former Wells Fargo execs over accounts scandal
The Office of the Comptroller of the Currency (OCC) filed charges against five former senior Wells Fargo executives, seeking $37.5 million in fines over a series of sales scandals dating to the early 2000s.
The OCC charged five former Wells Fargo consumer banking and compliance officials with violating federal bank regulations and will seek to permanently ban them from the banking industry.
The bank regulator on Thursday also announced it reached a settlement with former Wells Fargo chief executive John Stumpf, who agreed to pay $17.5 million in penalties and forgo any future management role at a U.S. bank.
“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,” said Comptroller of the Currency Joseph Otting.
The OCC’s charges are the latest legal blow for Wells Fargo and its former executives over a toxic culture driven by bank brass centered on unrealistic sales targets and high pressure tactics.
Wells Fargo admitted to charging customers fees on millions of accounts opened without their consent or sold through misleading tactics. The bank has paid billions of dollars in fines and legal settlements since 2016, and is operating under an unprecedented cap on asset growth imposed by the Federal Reserve.
The OCC’s suit includes the first charges filed against individual Wells Fargo executives related to a series of sales scandals that resulted in the ouster of Stumpf and his replacement, Timothy Sloan.
The former Wells Fargo executives charged by the OCC include Carrie Tolstedt, former head of the Wells Fargo’s Community Bank; Claudia Russ Anderson, former Community Bank Group risk officer; James Strother, former general counsel; David Julian, former chief auditor; and Paul McLinko, former executive audit director.
The OCC alleged that the executives failed to “adequately perform their duties and responsibilities, which contributed to the bank’s systemic problems with sales practices misconduct from 2002 until October 2016.”
“The Bank tolerated pervasive sales practices misconduct as an acceptable side effect of the Community Bank’s profitable sales model, and declined to implement effective controls to catch systemic misconduct,” the OCC alleged.
“Instead, to avoid upsetting a financially profitable business model, senior executives, including Respondents, turned a blind eye to illegal and improper conduct across the entire Community Bank.”
Wells Fargo chief executive and president Charles Scharf told bank staff that the OCC’s charges are “consistent with our belief that significant parts of the operating model of our Community Bank were flawed,” according to a statement shared with The Hill.
“At the time of the sales practices issues, the Company did not have in place the appropriate people, structure, processes, controls, or culture to prevent the inappropriate conduct.”
Scharf said the bank will be withholding any compensation still owed to those facing charges. Any legal actions the bank may make in regard to the charges are still tentative, he added.
“This was inexcusable,” Scharf added. “Our customers and you all deserved more from the leadership of this Company.”
Updated at 3:21 p.m.