Well’s Fargo is set to recover over $75 Million from the bank’s former CEO, John G. Stumpf, and its former head of community banking, Carrie L. Tolstedt.
The bank made headlines last year after a government investigation uncovered millions of fraudulent accounts created to mislead investors. While the banks customers were affected by a relatively small amount (3.2 million has already been refunded), 1000’s of bank employees were fired for not meeting the unrealistic and unethical sales goals.
The clawbacks — or forced return of pay and stock grants – come after an investigation discovered that CEO Stumpf turned a blind eye to the fraudulent activity and neglected to act. Mrs. Tolstedt, who managed the banks branch system, set unreachable sales goals for her department, and set practices that encouraged branch managers to commit fraud to meet sales expectations.
As many as 5,300 bankers were fired for creating about 2 million fraudulent bank and credit accounts in customers’ names, and sometimes shuffling money in and out of the fake accounts.
News of the clawbacks comes after both Stumpf and Tolstedt were allowed to retire. While Stumpf cooperated with the government investigation as well as Wells’ internal board, Tolstedt declined to be interviewed. Her lawyer, Enu Mainigi of the Washington firm Williams & Connolly, is also disputing claims that the blame lies mostly on her shoulders.
“We strongly disagree with the report and its attempt to lay blame with Ms. Tolstedt,” Ms. Mainigi said. “A full and fair examination of the facts will produce a different conclusion.”
While the clawback is the largest in banking history, many liken the penalty to a drop in the ocean.
This is like catching a guy robbing a convenience store, taking half the cash out of his loot bag and then letting him go.
— Gavin Lee Godby (@guyslifemag) April 10, 2017
One Wells Fargo employee opened 24 bank accounts for his teenager likely just to make his numbers. Omg
— Ken Sweet (@kensweet) April 10, 2017
.@WellsFargo will clawback $75m from two former execs for the scam that the company perpetrated. Will they give it to affected customers?
— Philip Pisanchyn (@PhilipPisanchyn) April 10, 2017