SEC charges former Wells Fargo executives over fake-accounts scandal
Updated 12:44 PM ET, Fri November 13, 2020John Stumpf, former chairman and chief executive officer of Wells Fargo, is banned for life from the banking industry over the bank’s 2016 fake accounts scandal.
New York (CNN Business)The Securities and Exchange Commission on Friday charged former Wells Fargo CEO John Stumpf and a top lieutenant with misleading investors about the success of the division at the heart of the bank’s fake-account scandal.The charges against Stumpf and Carrie Tolstedt, the former head of Wells Fargo’s community bank, are the latest legal rulings in the four years since the bank admitted to creating millions of fake bank and credit card accounts.Tolstedt embraced a metric, known as “cross-sell,” even though this measure was “inflated by accounts and services that were unused, unneeded or unauthorized,” according to the SEC.
Wells Fargo is a hot mess. It has only itself to blameIn other words, the former Wells Fargo executive bragged to investors about how many different accounts customers had — despite the fact that millions of these accounts were fabricated by employees trying to meet wildly unrealistic sales goals set by management.Sponsor content by AncestryGive the gift of Health this holiday seasonAlong with your genetic health assessment, AncestryHealth® gives you your ethnic origins and genetically influenced personal traits.Moreover, the SEC said Tolstedt signed off on the accuracy of Wells Fargo’s public disclosures “when she knew or was reckless in not knowing” that statements about the bank’s cross-sell metric were “materially false and misleading.”Tolstedt left Wells Fargo (WFC) at the end of 2016.The SEC is seeking civil penalties against Tolstedt and wants to ban her from becoming an executive officer or sitting on a corporate board.In a statement, Enu Mainigi, a lawyer at Williams & Connolly representing Tolstedt, defended her as an “honest and conscientious” executive.”It is unfair and unfounded for the SEC to point the finger at Ms. Tolstedt when her statements were not only true but also thoroughly vetted by others as part of Wells Fargo’s policies, procedures and systems of controls,” Mainigi said. “Ms. Tolstedt acted appropriately, transparently and in good faith at all times. We look forward to setting the record straight and clearing her name.”Stumpf, the former CEO, was accused by the SEC on Friday of signing and certifying statements in 2015 and 2016 about Wells Fargo’s cross-sell strategy and metric that he “should have known were misleading.”Even “after being put on notice that Wells Fargo was misleading the public about the cross-sell metric,” Stumpf “failed to assure the accur