WFC Wells Fargo and Company

By Ryan Tracy 

WASHINGTON -- A senior U.S. financial regulator purchased bank stocks while his nomination for the job was under review, financial disclosures indicate.

Comptroller of the Currency Joseph Otting was confirmed for the post in November and sold the stock in January, according to forms he has filed with U.S. agencies including the Office of Government Ethics.

In a financial disclosure signed by Mr. Otting on Feb. 20, 2018, he lists the sale of stock in Wells Fargo & Co., Goldman Sachs Group Inc., Morgan Stanley and KeyCorp., among other financial firms. It isn't clear exactly when he purchased shares in those companies. But financial disclosures dated March 2017 and released after the White House nominated him for the job don't list stakes in those banks.

The most recent disclosure, dated February 2018, is awaiting certification by the Office of Government Ethics.

All of those banks have subsidiaries regulated by the comptroller's office. Wells Fargo agreed to a major settlement with the office last week related to misconduct at the huge bank.

A spokesman for Mr. Otting said Wednesday he "has met all of his ethical obligations and remains committed to the highest ethical standards."

Mr. Otting divested the stock after taking office in compliance with ethics rules that are meant to guard against conflicts of interest. Those rules didn't apply to him before he took office.

The OCC spokesman also said Mr. Otting uses a professional money manager and "has not made individual decisions regarding specific stocks or securities for several years."

Mr. Otting valued the sale of the bank stock at between $15,000 and $50,000 for Goldman, Morgan Stanley, and Wells Fargo, and between $1,000 and $15,000 for KeyCorp.

He also sold shares of insurer Prudential Financial Inc., valued at between $1,000 and $15,000, according to the Feb. 20 document. That position also wasn't listed in his financial disclosure from March 2017.

As a member of the Financial Stability Oversight Council of senior regulators, Mr. Otting has participated in discussions about whether to remove federal oversight of Prudential. The OCC spokesman said Mr. Otting didn't participate in those discussions "until the divestitures were complete." The spokesman said the need for a recusal went away at that point.

Mr. Otting is a career banker who over the years amassed large holdings in financial stocks and other assets. The March 2017 financial disclosure valued his assets at more than $30 million.

After taking office on Nov. 27, Mr. Otting spent weeks recused from policy decisions because he had not yet unwound his financial holdings.

He was awaiting a certificate of divestiture allowing him to sell financial holdings without facing an immediate tax bill, a maneuver allowed under federal rules.

During that period, Mr. Otting had to amend the information he submitted to ethic watchdogs, according to internal emails disclosed in a Freedom of Information Act request.

Jennifer Dickey, an OCC ethics official, on Jan. 17 pressed ethics watchdogs for an update on the status of Mr. Otting's request for the certificate. "As I may have indicated before, this situation is significantly impacting the OCC's ability to plan the comptroller's calendar and the agency's activities," she wrote.

"As you know, this CD request has gone through many iterations with each subsequent change requiring an updated review. The most recent significant addition to the CD request came in on December 28," an OGE official wrote back, referring to the certificate of divestiture.

Mr. Otting received the certificate on Jan. 19, and began selling stock days later, the documents show.

The OCC said on Jan. 25 he was no longer recused from matters affecting most institutions, though he is continuing to recuse himself from matters affecting a handful of banks he has worked for or with during his career.

Write to Ryan Tracy at ryan.tracy@wsj.com

(END) Dow Jones Newswires

April 25, 2018 14:41 ET (18:41 GMT)

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