SAN FRANCISCO–John Stumpf, who was CEO at Wells Fargo at the time of its massive new account fraud scam, has agreed to pay $2.5 million to settle civil claims related to the scandal.
At the same time federal regulators have also file suit against another former wells Fargo executive.
As CUToday.info reported here, and elsewhere, Stumpf stepped down in 2016 as CEO without admitting or denying claims made by the Securities and Exchange Commission, which had accused him of misleading investors about the success of Wells Fargo’s community banking business.
Stumpf had earlier been barred from the banking industry and agreed to pay $17.5 million to settle claims in a case brought by the Office of the Comptroller of the Currency.
According to Wells Fargo, Stumpf was paid $19.3 million in total compensation during 2015, in part because the bank continued to grow accounts. It has since been revealed, however, that employees opened millions of sham accounts for customers in order to meet aggressive sales goals, including at least eight accounts per customer.
Ultimately, that scandal and others have led to billions of dollars in fines for Wells Fargo and a rare cap imposed on its growth by the Federal Reserve.
Suit Filed Against Former Exec
Meanwhile, the SEC has sued former consumer-bank head Carrie L. Tolstedt, filing a civil fraud case against her in San Francisco federal court.
“The regulators said Ms. Tolstedt publicly described and endorsed a key measure of Wells Fargo’s business, the ‘cross-sell metric,’ or the number of products the bank sold to its customers—without disclosing that it was inflated by unused and unauthorized accounts and services,” the Wall Street Journal reported.
The OCC separately charged Tolstedt earlier this year, seeking $25 million and a lifetime ban from the banking industry.
“It is unfair and unfounded for the SEC to point the finger at Ms. Tolstedt when her statements were not only true but also thoroughly vetted by others as part of Wells Fargo’s policies, procedures and systems of controls,” an attorney for Tolstedt told the Journal.
The Journal cited one former Wells Fargo banker who resigned in 2014 and who told Tolstedt, “I have spent a majority of my time here at Wells Fargo closing accounts for customers” who didn’t need or use them, according to the SEC’s complaint.