Stumpf to pay $17.5m over Wells Fargo fake accounts
John Stumpf, the former chief executive of Wells Fargo, has agreed to pay $17.5m as part of a civil settlement with the Office of the Comptroller of the Currency, which also charged or settled with seven other former senior executives of the bank.
The enforcement actions announced on Thursday by the US banking regulator related to the fake accounts scandal at Wells that emerged in 2016 and continues to haunt the bank.
Mr Stumpf, 66, agreed to a ban from any role at a US bank as part of his settlement, which did not require him to admit or deny the OCC’s allegations that he had failed to “respond to numerous warning signs” about problems at Wells. He was one of three former Wells executives who settled with the regulator.
Carrie Tolstedt, who previously headed the community bank at Wells, was one of five former executives who were charged civilly by the OCC. The regulator said it was seeking a $25m civil penalty from Ms Tolstedt.
Enu Mainigi, 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.”
Joseph Otting, who heads the OCC, said in a statement that the cases “reinforce the agency’s expectations that management and employees of national banks and federal savings associations provide fair access to financial services, treat customers fairly, and comply with applicable laws and regulations”.
Mr Stumpf, who was also the bank’s chairman, resigned in 2016 after leading the bank for nearly a decade. Though Wells had a reputation for combining profitability in its vast retail network with exemplary customer service, the fake accounts scandal showed systemic cultural and compliance problems at the bank.
On Thursday, the regulator said Mr Stumpf “was or should have been aware” of the problems at the lender.
“During [his] tenure, there was a culture in the community bank that resulted in systemic violations of laws and regulations, breaches of fiduciary duties, and unsafe or unsound practices by large numbers of community bank employees,” the OCC said.
An attorney for Mr Stumpf could not be immediately reached.
Mr Stumpf previously gave up $41m in unvested equity awards when he resigned and lost a further $28m that Wells clawed back in 2017. The bank also clawed back $47m from Ms Tolstedt, who gave up $19m in unvested equity awards when she left the bank.
In 2016, the OCC and other regulators fined Wells $185m in connection with the scandal. Last September, the bank named Charlie Scharf, the former chief executive of Visa and BNY Mellon, as its second chief executive since Mr Stumpf’s departure.
Mr Scharf, in a note to employees, said: “The OCC’s actions are consistent with . . . our belief that significant parts of the operating model of our community bank were flawed . . . Our customers and you all deserved more from the leadership of this company.”
Last year, Wells Fargo said it had settlement discussions with the US Department of Justice and the Securities and Exchange Commission in connection with their investigations into its sales practices.