Wells Fargo CEO re­tires amid ac­counts scan­dal

Baltimore Sun - - NATION & WORLD - By Ken Sweet

NEW YORK — Wells Fargo’s em­bat­tled CEO John Stumpf is step­ping down as the na­tion’s sec­ond-largest bank is roiled by a scan­dal over its sales prac­tices.

The San Fran­cisco bank said Wednes­day that Stumpf is re­tir­ing ef­fec­tive im­me­di­ately and also re­lin­quish­ing his ti­tle as chair­man. It had ear­lier an­nounced that Stumpf, the bank’s CEO since 2007, will for­feit $41 mil­lion in stock awards.

Wells Fargo’s chief op­er­at­ing of­fi­cer, Tim Sloan, will suc­ceed Stumpf as CEO and join the com­pany’s board. Sloan has been with Wells Fargo for 29 years. Stephen Sanger, the bank’s lead direc­tor, will serve as the board’s non-ex­ec­u­tive chair­man.

Stumpf’s end at Wells Fargo comes a lit­tle over a month after the bank was fined by Cal­i­for­nia and fed­eral reg­u­la­tors $185 mil­lion over its sales prac­tices.

The reg­u­la­tors al­leged em­ploy­ees try­ing to meet ag­gres­sive sales tar­gets opened bank and credit card ac­counts, moved money between those ac­counts and cre­ated fake email ad­dresses to sign cus­tomers up for on­line bank­ing — all with­out cus­tomer au­tho­riza­tion. Debit cards were is­sued and ac­ti­vated, as well as PINs cre­ated, with­out cus­tomers’ knowl­edge.

Stumpf, a 34-year vet­eran of the bank, had pre­vi­ously gained ac­claim for nav­i­gat­ing Wells Fargo through the fi­nan­cial cri­sis and keep­ing it free of scan­dal.

But he came un­der with­er­ing pres­sure over the al­leged mis­con­duct, be­lieved to have gone on at the bank for years. Some 5,300 lower- level em­ploy­ees were fired.

“While I have been deeply com­mit­ted and fo­cused on manag­ing the com­pany through this pe­riod, I have de­cided it is best for the com­pany that I step aside,” he said in a pre­pared state­ment Wednes­day.

Among Stumpf’s crit­ics, Demo­cratic Sen. El­iz­a­beth War­ren of Mas­sachusetts told him at a Se­nate Bank­ing Com­mit­tee hear­ing last month that he should re­sign and “give back the money you took while the scam was go­ing on.”

Stumpf earned $19.3 mil­lion last year. But he and Car­rie Tol­st­edt, the ex­ec­u­tive who ran the re­tail bank­ing divi­sion, will for­feit mil­lions.

Tol­st­edt an­nounced in July that she would re­tire from the bank this year and had been ex­pected to leave with as much as $125 mil­lion in salary, stock op­tions and other com­pen­sa­tion. She was stripped of $19 mil­lion of her stock awards, and her de­par­ture was made im­me­di­ate.

Be­fore the scan­dal, Stumpf was lauded for Wells Fargo hav­ing avoided some of the bad be­hav­ior of its peers in the lead-up to the fi­nan­cial cri­sis.

Wells Fargo didn’t in­vest in as many toxic mort­gages as its coun­ter­parts, and Wells Fargo was able to grow by buy­ing Wa­chovia.

Un­til then a pri­mar­ily West Coast and South­ern bank, that gave the com­pany known for its stage­coach logo ac­cess to East Coast and New York bank­ing mar­kets.

The rev­e­la­tions have sparked in­ves­ti­ga­tions by fed­eral agen­cies. The bank’s in­de­pen­dent direc­tors also have launched their own in­ves­ti­ga­tion.

Wells Fargo is sched­uled to re­port its quar­terly re­sults Fri­day.


John Stumpf, who earned $19.3 mil­lion last year, had been CEO of Wells Fargo since 2007.

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