US banking giant Wells Fargo has demanded two former senior executives to repay millions of dollars in bonus money for having played key roles in creating an “aggressive sales culture” that led to a sham account scandal.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.
The US banking giant said it demanded or “clawed back” an additional $28 million from former CEO John Stumpf, who led the bank at the time of the scandal, and $47 million more from former community banking chief Carrie Tolstedt, whose division was at the heart of the problem.
The moves came as Wells Fargo, a leader in consumer and mortgage banking, released a 110-page report on factors behind the scandal that involved opening of about two million deposit and credit card accounts in customers’ names without their approval or knowledge.
The report said Stumpf “was too slow to investigate or critically challenge sales practices in the Community Bank” or to “appreciate the seriousness of the problem and the substantial reputational risk to Wells Fargo.”
In addition, a decentralized structure gave “too much autonomy to the Community Bank’s senior leadership, who were unwilling to change the sales model or even recognize it as the root cause of the problem,” the report said.
“Community Bank leadership resisted and impeded outside scrutiny or oversight and, when forced to report, minimized the scale and nature of the problem.”
But Carrie Tolstedt on Monday rejected the investigation’s findings.
“We strongly disagree with the report and its attempt to lay blame with Ms. Tolstedt. A full and fair examination of the facts will produce a different conclusion,” Enu Mainigi, Williams & Connolly LLP, attorneys for Tolstedt, said in a statement.
Under investigation
Along with an earlier round of punishments of the two executives, Wells Fargo has clawed back a total of $69 million from Stumpf and $67 million from Tolstedt.
The report comes ahead of Wells Fargo’s April 25 annual meeting, where board members are facing the risk of a shareholder revolt. Shareholder advisory groups Institutional Shareholders Services and Glass Lewis have recommended the ousting of several board members.
The bank has already paid $185 million in fines to federal and local authorities and settled a $110 million class-action lawsuit.
The scandal also resulted in the abrupt retirement last October of longtime CEO Stumpf, not long after he underwent blistering questioning from congressional panels.
The bank remains under investigation in several states, as well as by the Securities and Exchange Commission, for its practices.
sri/mds (AFP, Reuters, AP)
