Report cites Arizona as an 'epicenter' in Wells Fargo's fake-accounts scandal

Stumpf instead chose to stand back and rely on the community bank to fix its own problems, the report said. Five executives have been fired as well, including Tolstedt.

"We accept the board's findings as a critical part of our journey to rebuild trust", he said in a statement.

"On April 7, 2017, the Board additionally determined that Wells Fargo will claw back approximately $28 million of Stumpf's incentive compensation", the findings detail, using a term to describe the recovery of compensation that's already been disbursed.

The report also says that problems in the bank's sales culture date back to at least 2002, far earlier than what the bank had previously said.

More than $75 million is being extracted from two of its former executives who were found to have been too slow to probe "improper and unethical behavior", according to "USA Today".

And yet, it's telling that WFC's stock price hardly moved on Monday.

While the report said Stumpf, who spent more than 30 years at the bank, was ultimately responsible for the scandal, it lays much of the blame on Tolstedt, who ran the bank's community banking division, encompassing some 6,000 branches. Better Markets, a nonprofit organization that advocates stricter regulation of Wall Street, called the report a compendium of "too-little, too-late cosmetic actions" and called on shareholders to oust all of Wells Fargo's board members at the company's annual meeting this month.

Two influential shareholder advisory firms have also called for significant changes to the board.

The fundamental flaw of the Shearman & Sterling investigation is its failure to come to grips with the duties of the board of directors.

"Growing indications that the situation was worsening and threatened substantial reputational harm to Wells Fargo" weren't enough to prompt Stumpf to investigate and critically analyze the problem, the report stated. "They were commonly referred to as 50/50 plans, meaning that there was an expectation that only half the regions would be able to meet them", the report said. An internal investigation revealed that about 1 percent of the bank's employees were fired annually for sales integrity violations. He refused to believe the model was seriously impaired and was full of admiration for Tolstedt, with whom he had a long working relationship.

Many things collectively should have raised suspicion, the report said. The bank performed an inside study of Wells Fargo's scandal involving employees opening up accounts in customers' names without their knowledge or permission. And up until this year, Wells Fargo management highlighted its so-called "cross-sell ratio", which is the number of accounts or other services a Wells Fargo customer typically had at the bank. Despite that, the goals got even higher, and so did firings and resignations when the goals could not be met. This demands answers. Elizabeth Warren, are you listening?

Though plenty of Ellison's constituents are Wells Fargo customers or employees, banks behaving badly is a bread-and-butter topic for Ellison.

On the advice of her lawyers, Tolstedt declined to be interviewed for the investigation. But other investigations - including criminal inquiries by the Justice Department and several state attorneys general - remain in progress. Monday's report backs up those employees' stories.

The review of the cases is ongoing, the report said, and has included files for almost 900 ex-employees who were fired within a year after calling in a tip to the bank's ethics hotline or within a month of the bank disclosing in a $185 million settlement in September that employees had opened as many as 2 million accounts without customer permission.

  • Zachary Reyes