Wells Fargo now holds a market cap of $235 billion just a sheer $4 billion smaller than the JPMorgan’s market capitalization following Tuesday’s announcement stating the intention to end sales goal by January 1.
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“During a 2015 interview with the San Francisco Business Times, Wells Fargo executive Doug Case said, “. our CEO John Stumpf very frequently will talk about LGBT inclusiveness and, talk about walking the talk”.
“We are eliminating product sales goals because we want to make certain our customers have full confidence that our retail bankers are always focused on the best interests of customers”.
The Senate Banking Committee plans to hold a hearing September 20 on San Francisco-based Wells Fargo, following last week’s enforcement case in which regulators accused bank employees of opening deposit and credit-card accounts without approval to meet sales goals.
A Wells spokeswoman defended the bank’s handling of the crisis: “I would offer that our leaders in the Community Bank were not just aware, they were working to significantly strengthen our training, monitoring, oversight and compensation structure, which led to a reduction in this behavior”. Wells Fargo fired 5,300 employees who allegedly created about 2 million fake accounts. In addition to the CFPB fine, Wells Fargo agreed to pay $35 million to the Office of the Comptroller of the Currency and $50 million to the City and County of Los Angeles.
Despite the shocking scandal at her division, 56-year-old Tolstedt is set to walk away with an even bigger fortune when she retires at the end of the year – a $124 million payday through a mix of shares, options and restricted stock, according to calculations of company filings based on the current stock price.
On Friday, Wells Fargo sent an alert to some of its employees requesting that they temporarily suspend the practice of trying to sell customers other products – known as cross-selling – because of high call volumes.
The new accounts would charge bogus fees to the account holder and making more money for Wells Fargo.
A total of 29 brokerages have reported on Wells Fargo & Co.
Wells Fargo has .85 trillion in assets, according to Forbes.
HR professionals should stand up to the C-suite when they first hear of code violations from whistle-blower employees within the company, so that a culture of compliance and ethics trumps an environment of hitting sales goals at any cost.
It’s unclear when Tolstedt became aware of the scam and she was not named in any Consumer Financial Protection Bureau paperwork.
The announcement comes amid a gathering public storm over a fake account scandal at the bank that has led to $190 million in fines and the firing of 5,300 employees.
The company’s biggest investor and shareholder, Warren Buffett, just lost nearly $1.9 billion stocks following the scandal which led to the drop in WFC stocks making him one of the biggest losers following Tuesday’s close.
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The case has thrust the San Francisco-based bank into a harsh spotlight at a time when big US banks are still attempting to fix their reputations following the 2008 financial crisis. It’s unclear why Wells knew about these issues in 2013 but did not take more forceful corrective action.
