Regulators said the bank’s employees engaged in a “widespread illegal practice” by secretly opening more than 2 million deposit and credit card accounts that may not have been authorized by customers to meet sales goals.
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US prosecutors have begun an investigation related to sales practices at Wells Fargo & Co that led the bank to agree to a $190 million settlement with regulators, a person familiar with the matter said on Wednesday.
Separately, Wells Fargo said Tuesday that it would eliminate all product sales goals in its retail banking operations starting in January.
Bank stocks also were pressured Tuesday as traders reduced bets that the Federal Reserve will increase interest rates at next week’s meeting.
Wells Fargo did not immediately respond to a request for comment. That was set to reach $1.75 million this year before Ms. Tolstedt announced her retirement. When she retires at the end of the year she will be eligible for $124.6 million in stock, options, and restricted Wells Fargo shares, some of which haven’t vested yet, according to Fortune.
When Wells Fargo executive Carrie Tolstedt retires at the end of this year, she will get a payout of $124.6 million in stock options and bonuses even though employees in the unit she headed opened nearly 2 million fraudulent checking and credit card accounts since 2011.
Wells Fargo spokeswoman Aimee Worsley told ABC News that the bank believes it has identified and refunded all affected customers, though it encourages customers who think they may have been affected to come forward. Customers were then often hit with assorted fees for accounts they didn’t know they had, the regulators charged.
“Wells Fargo built an incentive-compensation program that made it possible for its employees to pursue underhanded sales practices, and it appears that the bank did not monitor the program carefully”. Last week, the bank was fined $185 million after its employees spent years screwing customers by creating fake accounts in their names without their approval or knowledge. The amount also includes $50 million to the Los Angeles city attorney in civil penalties, the largest that agency says it has ever received. A customer with a checking account, for example, would be encouraged to consider a credit card or savings account. The Chief Financial Officer at Wells Fargo, John Shrewsberry, said approximately 10 percent of the employees let go were branch managers or higher.
The magnitude of the fraud described by regulators should be thoroughly investigated, five Democratic lawmakers said in a letter to the head of the Senate Banking Committee, Richard Shelby, R-Ala., asking for a hearing on the case.
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Following criticisms that US authorities had failed to hold bankers to account in the aftermath of the financial crisis, the Justice Department last September issued a policy requiring all civil and criminal cases begin and end with a focus on individual accountability.
