Federal prosecutors are investigating Wells Fargo & Co.in connection with the bank’s sales practices after it agreed to pay $185 million in fines for opening more than 2 million unauthorized accounts, according to a person familiar with the Justice Department investigation. He is the highest-ranking Wells Fargo executive to publicly speak about alleged misdeeds at the bank since the settlement was announced.
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Wells Fargo is going to fork over 5 million in penalties and $5 million to customers that government regulators contend were not-so-gently driven into fee-generating accounts and services that, in most cases, they never wanted, according to various media outlets. “The financial tailwind from the sales mishaps was immaterial to the company’s fee revenue, but the elimination of product sales goals could materially change how the company’s retail banking segment operates and the fee revenue it generates”. The committee plans to hold the hearing September 20.
The U.S. Attorney’s Offices for the Southern District of NY and the Northern District of California are in the first stages of an examination that eventually could result in federal court action, a U.S. official familiar with the matter said Wednesday, confirming an initial report by The Wall Street Journal.
The Consumer Financial Protection Bureau fined the bank $100 million, the largest fine the agency has levied against a financial institution since it was created five years ago.
“I guarantee you that we will be seeing that it does not happen again at any bank”, he said.
Stumpf also declined to say he supports efforts to “claw back” the $124 million in stocks and options that community banking head Carrie Tolstedt is set to walk away with when she retires at the end of the year. “When we fall short of that goal, I feel accountable and our leadership team feels accountable-and we want all our stakeholders to know that”.
Wells Fargo CEO John Stumpf is “sorry” for the fake-account scandal at his bank, but he’s got no plans to exit despite a growing firestorm.
The activity peaked in 2013 and mostly occurred in the Southwest part of the country, John Shrewsberry, the company’s chief financial officer, said at a conference Tuesday.
Specifically, approximately 5,300 employees may have opened roughly 1.5 million deposit accounts, transferring funds from consumers’ accounts to temporarily fund the new, unauthorized accounts.
Tolstedt’s salary is $1.7 million.
Wells Fargo has always been known for its aggressive sales goals, but in an industry plagued with questionable action during the mortgage bubble and financial crisis, it was also regarded as a well-run, tightly managed firm.
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Stumpf, Cordray and Tom Curry, from the Office of the Comptroller of the Currency, will testify before the committee next week.
