Miércoles, 21 Noviembre, 2018

Wells Fargo report: no 'pattern of retaliation' against whistleblowers

Wells Fargo sign is displayed at a branch in New York. In the results of an investigation released Monday Wells Fargo Board faults aggressive culture in sales scandal
Manuel Armenta | 16 Abril, 2017, 09:40

Structurally, the bank was too decentralized, with department heads like Tolstedt given the mantra of "run it like you own it", and enjoying broad authority to shake off questions from superiors, inferiors, or lateral colleagues.

The unauthorized bank products included checking accounts, savings accounts and credit cards and carried various fees. It showed that current and former employees were pressured by the unrealistic sales goals imposed by the company the pushed them to the unethical behaviour. There were similar large-scale terminations for such conduct over the next decade, the report said, yet top executives repeatedly failed to look at what the root problem might be. The company's board decided the clawback due to the former executives' little interest in dealing with sales abuses that happened during the time they handled the management.

James Strother: As general counsel, Strother kicked off a May 2015 presentation to the board's risk committee (the board doesn't specify what he said), before Tolstedt spoke. The report casts her as a powerful and insular leader who focused obsessively on sales targets and turned a blind eye to signs that some managers and employees were cheating to meet them. 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. Former CEO Stumpf, who resigned in October, is referenced only 81 times.

Wells Fargo's new and highly regarded CEO, Tim Sloan, said in a conference call with reporters it was "frustrating" to hear these charges.

Lawyers for Ms Tolstedt, who declined to be interviewed for the investigation, rejected the report's findings.

The board's report, which praised changes the bank has made since the sales scandal erupted, is unlikely to quell the bank's critics.

The independent investigation report into the Wells Fargo fraudulent account scandal, released early Monday, already is being described as "scathing", and properly so. Shareholder advisory groups Institutional Shareholders Services and Glass Lewis have recommended the ousting of several board members. A careful reading of the report reveals a board that took months, even years, to get its arms around the scandal despite plenty of warnings about its nature magnitude. "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.

Initially created to motivate branch employees to exceed sales goals, the pressure to beat higher daily sales targets instead encouraged them to forge customer signatures, hold off on opening accounts signed for in December and target friends and family to make up the numbers.

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.

The report has been in the works since September, and the board hired Shearman & Sterling LLP to investigate the sales scandal.

Now comes word that Wells Fargo's board of directors, in an effort to rebuild the bank's trashed image, is clawing back $75 million in compensation from Stumpf and another executive for failing to adequately address the bank's behavior and the toxic internal culture that encouraged this fraud.

Wells Fargo's decentralized model was partly inherited from Norwest, when the two banks merged in 1998, the report said.

He later boasted of even higher numbers, such as 6.17 in 2014 - as Sen.

San Francisco-based Wells Fargo has about 269,000 employees nationwide, with more than 24,000 in Charlotte, its biggest employee hub. It has been under investigation by the Securities and Exchange Commission because of its practices.

Investigators found no evidence of retaliation in the cases of 11 ex-employees who were publicly identified as whistleblowers in media reports, according to the report.

Wells Fargo had agreed September 8 to pay a combined $185 million in fines to resolve regulatory complaints about 1.5 million potentially fraudulent customer checking and 623,000 credit-card accounts. Despite that, the Community Bank continued to increase the sales goals under her direction until 2013, the report states.

Going forward, Ellison says he'd like to have more hearings to explore the issue and uncover more information, though that could be a tough lift for the House's minority party after the shock of the scandal has faded.