Sábado, 23 Febrero, 2019

Wells Fargo Appoints Head of New Financial Institutions Group

Here's how Wells Fargo workers created fake accounts Here's how Wells Fargo workers created fake accounts
Manuel Armenta | 15 Abril, 2017, 16:57

Together with an earlier round of punishments, Wells Fargo has clawed back a total of US$69 million from Mr Stumpf and US$67 million from Ms Tolstedt. Wells Fargo's report indicates that over 1,800 customers in Minnesota had more than two deposit accounts that were tampered with, while over 250 people had more than two unauthorized credit accounts opened in their names. In dollar terms, that inquiry proved very costly to former Wells Fargo (wfc) CEO John Stumpf, who will give up another $28 million of past compensation in addition to a previously announced $41 million clawback, as well as Tolstedt, who will relinquish $47 million more of her pay on top of the $19 million that was already revoked.

Managers within Community Banking exerted "significant, and in some cases, extreme pressure on employees to meet or exceed their goals", sometimes calling subordinates several times a day to check on sales, the report said.

But still, not everyone is convinced this is enough.

Sanger, a board member since 2003, faces pressure to root out the problems amid calls by advisory group Institutional Shareholder Services for investors to oust him and other directors in place when the scandal broke.

"We accept the Board's findings as a critical part of our journey to rebuild trust", Wells Fargo CEO Tim Sloan said in a statement.

The release of the 113-page investigative report compounds the company's crisis ahead of an April 25 annual meeting, where board members will be up for reelection. Tolstedt was allowed to manage the bank's massive retail banking operations with little oversight and repeatedly played down concerns that employees were engaged in risky behavior, the report found. Led by a special committee of Independent Directors, the investigation was launched in September 2016 and assisted by Shearman & Sterling LLP.

Yet it took a dozen years - and a national firestorm coupled with Congressional hearings - for Wells Fargo to finally eliminate those now-infamous sales goals, where employees were incentivized to open multiple accounts for each customer.

The result was a "relentless focus on sales, abbreviated training and high employee turnover", the report said, adding that the bank was at times run more like a department store than a financial institution.

The San Francisco-based bank disclosed the steep financial penalties for its former chief executive and former head of its community banking arm in a lengthy report from independent directors on Wells Fargo's board.

Meanwhile, the board could find nothing worse to say about Stumpf than that he "was by nature an optimistic executive" who "nonetheless moved too slowly to address the management issue".

But, according to the report, Stumpf was notified of a problem at one of the bank's Colorado branches in 2002 that led to "mass termination" of bank employees. 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.

A lawyer for Stumpf declined to comment on the report.

But the report heaped most blame on senior management, not the fired employees.

In response to Ellison's questions, Wells Fargo was able to reveal some information about how many Minnesotans were affected by its sales practices, customers and employees alike.

Last year, the Consumer Financial Protection Bureau (CFPB) fined Wells Fargo $185 million, including a $100 million penalty the bank will pay to the CFPB's civil penalty fund - the largest fine ever levied by the regulator. There was no joined-up effort by either the bank's human resources or legal divisions to track and analyze the problem.

Michael Loughlin: He became the company's risk chief in 2010 but didn't have "directive power to enforce changes" on some businesses because of a decentralized management structure, according to the report. "A full and fair examination of the facts will produce a different conclusion", said Enu Mainigi of law firm Williams & Connolly.