Wells Fargo Report Shows Bogus Accounts Go Back To At Least 2002
- Author: Salvatore Jensen Apr 12, 2017,
Apr 12, 2017, 13:46
CORNISH: The whole crux of this scandal is the idea that you are walking into a Wells Fargo Bank and somebody could end up opening up an account in your name, one that you did not authorize. And, of course, the politicians have been really grilling the bank both in two congressional hearings and now there's even more state and federal investigations.
Today analysts at Piper Jaffray upgraded Wells Fargo & Company's (NYSE:WFC) shares to "Neutral" in a report released to investors.
However, the board's concluded that Sloan had little direct involvement in the questionable sales practices.
Wells Fargo's misdeeds, which came to light in September, have at least temporarily become a more widely recognised symbol of the bank than its signature stagecoach.
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. The Company is a diversified financial services company.
The board's report recommended that Stumpf and Tolstedt have more of their compensation clawed back for their negligence and poor management.
Together with an earlier round of punishments of the two senior executives, Wells Fargo has clawed back a total of $69 million from Stumpf and $67 million from Tolstedt. However, the board conducted an independent investigation.
Wells had acknowledged fraudulent accounts were opened by employees from 2011 to 2016.
It adds, "Confident those costs would be relatively modest, the Law Department did not appreciate that sales integrity issues reflected a systemic breakdown in Wells Fargo's culture and values and an ongoing failure to correct the widespread breaches of trust in the misuse of customers' personal data and financial information".
The goal was meeting sales targets to qualify for bonuses and salary increases, although the board determined that in some instances employees felt compelled to participate to keep their job.
The investigators said the community bank division's senior leadership "distorted" the sales model and performance management system, fostering an atmosphere that prompted low quality sales and improper and unethical behavior. Its sales stood at 1.70% a year on average in the period of last five years. Things like multiple checking accounts, credit cards and other accounts.
"We strongly disagree with the report and its attempt to lay blame with Ms Tolstedt", Mainigi said. The lawyer said that a full and fair examination of the facts would produce a different conclusion.
"[Wells' management] created pressure on employees to sell unwanted or unneeded products to customers and, in some cases, to open unauthorized accounts", the report said. In January, the board took the unusual action of publicly firing four executives whom the board said had major roles in the bank's sales practices at the center of the scandal.
"Stumpf's long-standing working relationship with Tolstedt influenced his judgment as well". Stumpf had already agreed to give up $41 million in compensation. "However, management reports did not accurately convey the scope of the problem".
The bank's board also clawed back another $75 million in pay from two former executives, Chief Executive Officer John Stumpf and community bank executive Carrie Tolstedt, saying both executives dragged their feet for years regarding problems at the second-largest USA bank.