Wells Fargo (NYSE:WFC)
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1 Month : From Jan 2020 to Feb 2020
By Rachel Louise Ensign and Ben Eisen
A regulator barred former Wells Fargo & Co. chief executive John Stumpf from the banking industry over the firm's fake-account scandal, an extraordinary sanction for a top executive at a large bank.
Mr. Stumpf agreed to the ban in a settlement with the Office of the Comptroller of the Currency. He also agreed to pay $17.5 million. The firm's former chief administrative officer and chief risk officer settled similar charges, and five other former executives, including the former consumer-bank chief, were also charged.
The sanction and charges are the latest blow in the downfall of Mr. Stumpf and the bank he once led. For much of Mr. Stumpf's tenure, Wells Fargo was seen as a folksy industry darling that had escaped the financial crisis largely unscathed. But that reputation was left in tatters after it became public that an aggressive sales culture led employees to open millions of possibly fake accounts.
The OCC's actions also show a flexing of regulatory muscle at an agency that hasn't always been known for throwing its weight around. Since the scandal, though, the regulator has turned up the pressure on Wells Fargo. Officials last year debated whether to force out top executives at the bank, The Wall Street Journal reported at the time, and Mr. Stumpf's successor stepped down soon after.
The fake-accounts scandal has taken a heavy toll on the bank. It burst into public view when the OCC, the Consumer Financial Protection Bureau and the Los Angeles City Attorney's office fined Wells Fargo in September 2016.
Top executives underestimated the ire the fake accounts would provoke among customers, regulators and lawmakers. Mr. Stumpf, who spent more than three decades at the bank, was hauled before Congress and resigned after his testimony went poorly.
Under pressure from the mounting scandal, the former CEO also forfeited about $70 million in pay.
Wells Fargo's board said in a 2017 investigation that in the years before the issues became public, Mr. Stumpf moved too slowly to address the fake-account issue. But the report also said "responsibility most surely does not lie with John Stumpf alone," and pinned much of the blame for the problem on other executives like former consumer-bank head Carrie Tolstedt.
The OCC said Thursday that Mr. Stumpf "was or should have been aware of the problem and its root cause," and that "there was a culture in the Community Bank that resulted in systemic violations of laws and regulations."
The OCC agreed to settle similar charges with the firm's former chief administrative officer and chief risk officer. They paid a combined $3.5 million.
The regulator also charged five other former executives, including Ms. Tolstedt, who ran the consumer bank when many of the fake accounts were opened. Those cases are slated to play out in administrative proceedings.
An attorney for Ms. Tolstedt said "throughout her career, Ms. Tolstedt acted with the utmost integrity and concern for doing the right thing. A full and fair examination of the facts will vindicate Carrie."
Wells Fargo's business has struggled in the wake of the scandal. Its shares have fallen 3.3% since the day it was fined for fake account openings, missing out on a broader bank rally that pushed the KBW Nasdaq Bank Index up 52%. It reported annual revenue of $85.06 billion last year, down almost 4% from 2016.
Write to Rachel Louise Ensign at firstname.lastname@example.org and Ben Eisen at email@example.com
(END) Dow Jones Newswires
January 23, 2020 15:44 ET (20:44 GMT)
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