Wells Fargo claws back another $75m after fake accounts scandal | Fin24
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Wells Fargo claws back another $75m after fake accounts scandal

Apr 10 2017 17:55

New York - Wells Fargo took back another $75m in pay from two former executives who played key roles in the bank's fake accounts scandal, the bank announced Monday.

The US banking giant said it demanded or "clawed back" an additional $28m from former chief executive John Stumpf, who led the bank at the time of the scandal, and $47m more from former community banking chief Carrie Tolstedt, whose division was at the heart of the problem.

The moves came as Wells Fargo, a leader in consumer and mortgage banking, released a 110-page report on factors behind the scandal that involved opening of about two million deposit and credit card accounts in customers' names without their approval or knowledge.

The report said ex-CEO Stumpf "was too slow to investigate or critically challenge sales practices in the Community Bank" or to "appreciate the seriousness of the problem and the substantial reputational risk to Wells Fargo."

In addition, a decentralised structure gave "too much autonomy to the Community Bank's senior leadership, who were unwilling to change the sales model or even recognise it as the root cause of the problem," the report said.

"Community Bank leadership resisted and impeded outside scrutiny or oversight and, when forced to report, minimised the scale and nature of the problem."

Along with an earlier round of punishments of the two executives, Wells Fargo has clawed back a total of $69m from Stumpf and $67m from Tolstedt.

The report comes ahead of Wells Fargo's April 25 annual meeting, where board members are facing the risk of a shareholder revolt. Shareholder advisory groups Institutional Shareholders Services and Glass Lewis have recommended the ousting of several board members.

Shares of Wells Fargo rose 0.4% to $55.05 in pre-market trading.

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