Economy

Wells Fargo claws back $75 million more from Stumpf, Tolstedt

Wells Fargo claws back $75 million more from Stumpf, Tolstedt

Wells Fargo took back another $75 million (71 million euros) in pay from two former executives who played key roles in the bank's fake accounts scandal, the bank announced Monday.

Last September, the bank paid $185 million in fines over the scandal.

The board's results cap a six-month independent investigation that has not only rocked the country's third largest bank by assets but also the broader banking industry, with dozens of firms examining their own sales practices at the behest of regulators. Federal prosecutors are considering criminal or civil charges against the company, the Labor Department is investigating whether it illegally fired employees who reported the wrongdoing, and several cities and states, including California, have stopped doing business with the bank for now. Stumpf will lose an additional $28 million in compensation, on top of the $41 million the board already clawed back. Since taking that position, Sanger has clawed back tens of millions of dollars in stock awards and compensation due to Stumpf and Tolstedt.

With the report, the board officially placed the bulk of the blame on Tolstedt, who was described retroactively as fired with cause, and John Stumpf, who retired as chairman and chief executive in October. But the board is evidently allowing Stumpf to retain more than $100 million in other compensation. Why?

"Tolstedt never voluntarily escalated sales-practice issues and, when called upon specifically to do so, she and the community bank provided reports that were generalised, incomplete and viewed by many as misleading", the authors wrote in the report released on Monday (Tuesday AEST).

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The report was unrelenting in its criticism of Stumpf and Tolstedt, saying that both, when presented with the growing problems in Wells' community banking division, were unwilling to hear criticism or consider changes in behavior.

Many current and former employees have talked of intense and constant pressure from managers to sell and open accounts, and some said it pushed them into unethical behavior. Management was also slow to inform the board about the serious nature of the problem, including the firing of thousands of employees over sales practices. That was the year the Los Angeles Times published a landmark investigation on Wells Fargo's sales culture.

The executives were also blasted for cultivating an atmosphere of unrealistic expectations at the bank.

"While we have already made significant progress in making things right with customers and addressing issues, including several issues identified in the investigation, the Board's comprehensive findings provide another important opportunity to learn from our mistakes and take action to improve the way we operate, serve customers, and lead our team members". Nonetheless, her name is mentioned 142 times in the report. Neither Mr. Stumpf nor Ms. Tolstedt could be reached for comment.

"We will trust investors to make their own decisions about how they will vote".

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Additionally, the review - which relied on hundreds of interviews and the analysis of millions of documents - found an unwillingness among executives, including Tolstedt and Stumpf to change the sales model or recognize the issues. He refused to believe the model was seriously impaired and was full of admiration for Tolstedt, with whom he had a long working relationship. At one meeting in 2015, members of the board's risk committee were left with the impression that only 230 people had been terminated for sales abuses over the prior two years.

The report confirmed what former Wells Fargo employees have previously told CNNMoney: sales abuse was going on for a lot longer than the 2011 to 2016 period that the bank has admitted to.

"The board's report is a necessary examination of what went wrong in our culture, operations, and governance", Sloan said.

The latest clawbacks were announced as the bank published a 110-page report on the causes of the scandal.

An investigation conducted by outside investigators concluded that the leaders of the company had not acted swiftly to contain the problem.

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In response to a question about whether Mr. Sanger should resign or take more responsibility for the sales-practices scandal, Mr. Sanger said the board "took appropriate actions with the information it had". In October alone of past year the expenditure for advertisements was increased by 32 percent on a yearly basis to $27.5 million.


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