Wells Cuts Leader of Muni Team

The Bond Buyer - - Front Page - By yvette Shields and aaron Weitz­man

Wells Fargo fired its pub­lic fi­nance chief Strat­ford Shields, a move that shifts lead­er­ship of a bank­ing group shaped by Shields over the last year.

The bank – the 6th largest se­nior man­ager so far this year -said it in­formed Shields and the pub­lic fi­nance group of the dis­missal Thurs­day and de­clined to com­ment on the rea­sons be­hind his fir­ing. It came af­ter Shields’ place­ment on ad­min­is­tra­tive leave last month.

The pub­lic fi­nance depart­ment was told it “would now be re­port­ing to Marty Bing­ham,” a per­son close to bank­ing staff said Thurs­day. The firm said it was not ready to an­nounce a re­place­ment, act­ing or per­ma­nent, for Shields.

A spokes­women for Wells said the com­pany is look­ing to fill the head of pub­lic fi­nance role “shortly” and that per­son, once hired, will re­port to Bing­ham.

Shields, who joined the firm in

Novem­ber 2017, is not leav­ing silently as mu­nic­i­pal man­agers of­ten do when they are ousted with com­pen­sa­tion pack­ages that re­quire dis­cre­tion.

He placed the blame for his ouster, which fol­lowed his place­ment on “ad­min­is­tra­tive leave” last month, on in­ter­nal con­flicts.

“Mr. Shields can­not yet com­ment in de­tail on the spe­cific rea­sons for or terms of his de­par­ture, the lat­ter of which is still be­ing dis­cussed,” a Shields rep­re­sen­ta­tive said in an emailed state­ment. “By any ob­jec­tive mea­sure, un­der the dif­fi­cult in­sti­tu­tional cir­cum­stances Mr. Shields in­her­ited in his depart­ment, the pub­lic fi­nance group had a strong 2018, in­clud­ing im­proved lead man­aged ne­go­ti­ated rank­ings, and is primed for an even bet­ter 2019.”

“Un­for­tu­nately, given re­cent or­ga­ni­za­tional changes, it ap­pears that cer­tain Wells Fargo man­age­ment team mem­bers used a base­less rea­son to engi­neer Mr. Shields’ exit, in an at­tempt to es­cape con­trac­tual obli­ga­tions.”

“Un­for­tu­nately, given re­cent or­ga­ni­za­tional changes, it ap­pears that cer­tain Wells Fargo man­age­ment team mem­bers used a base­less rea­son to engi­neer Mr. Shields’ exit, in an at­tempt to es­cape con­trac­tual obli­ga­tions,” said a rep­re­sen­ta­tive for Shields.

The rep­re­sen­ta­tive de­clined to com­ment on whether Shields would pur­sue a law­suit or ar­bi­tra­tion with re­spect to his fir­ing.

A per­son fa­mil­iar with the sit­u­a­tion said the power strug­gle stemmed from Phil Smith’s re­cent pro­mo­tion to lead spe­cialty in­dus­tries. Shields be­gan re­port­ing to Bing­ham — who has headed up sales, trad­ing, and syn­di­cate — last month. Shields was close to Smith, who as ex­ec­u­tive vice pres­i­dent and head of Gov­ern­ment and In­sti­tu­tional Bank­ing at Wells Fargo had hired Shields.

Bing­ham and Shields clashed, said sources close to Shields and bank­ing staff.

They said the ad­min­is­tra­tive leave and fir­ing were based on a shout­ing match wit­nessed by oth­ers be­tween Shields and an­other banker. It’s not known who the ar­gu­ment was with, but it was not Bing­ham.

The San Fran­cisco-based bank de­clined to com­ment.

Wells ranked 6th so far this year as a se­nior man­ager na­tion­ally with 227 is­sues val­ued at nearly $14 bil­lion and was 7th last year with 288 is­sues val­ued at $23.1 bil­lion.

Wells Fargo’ pub­lic fi­nance group had been await­ing the re­sults of the leave. Such leaves are not un­com­mon and can be trig­gered by a va­ri­ety of com­plaints over po­ten­tial vi­o­la­tions of ac­cept­able bank prac­tices, said the source close to bank­ing staff. In­ter­nally, some spec­u­lated that it might be re­solved and Shields would re­turn.

In­ter­nally, word be­gan to spread this week that Shields would not re­turn, said a source close to bank­ing staff.

As that in­for­ma­tion be­gan to spread through­out the pub­lic fi­nance com­mu­nity this week, sev­eral neg­a­tive sto­ries sur­faced and be­gan to cir­cu­late in­ter­nally and ex­ter­nally.

One in­volved a 1991 story in an Ohio news­pa­per that por­trayed Shields in a neg­a­tive light for false in­for­ma­tion on his re­sume and run-ins with the law. A sec­ond in­volved an al­leged im­pro­pri­ety over hir­ing and ef­forts to win bond work.

In­for­ma­tion of the spread of those sto­ries came from a hand­ful of sources in mul­ti­ple re­gions.

“You are un­der a spot­light” once a re­view is trig­gered, and that can lead to the rev­e­la­tions or the resur­fac­ing of other neg­a­tive in­for­ma­tion un­re­lated to the in­ci­dent that re­sulted in leave sta­tus com­ing out, said a per­son close to Wells bank­ing staff.

The firm said nei­ther is­sue drove the fir­ing. Shields’ rep­re­sen­ta­tive also said nei­ther was be­hind the fir­ing and added the Ohio story was “old news” and Shields has no knowl­edge of any al­le­ga­tion about im­proper busi­ness prac­tices.

The new de­vel­op­ments within the Wells Fargo bank­ing team come as the firm has worked to re­cover over the last two years from dam­age in­flicted in 2016 over the phony bank­ing ac­counts scan­dal on the com­mer­cial side.

The firm faced fines im­posed by the Con­sumer Fi­nan­cial Pro­tec­tion Bureau and 5,000 em­ploy­ees were fired over busi­ness prac­tices that drove em­ploy­ees to cre­ate more than two mil­lion new ac­counts with­out cus­tomers’ knowl­edge or au­tho­riza­tion, in or­der to gen­er­ate new fee revenue.

The in­vest­ment bank­ing side suf­fered fall­out as some prom­i­nent lo­cal and state is­suers in Cal­i­for­nia, lli­nois, New York and Ohio shunned do­ing bond or other fi­nan­cial ser­vices’ busi­ness with the bank. Many of those bans have since eased.

“It’s quite sad. The firm is un­der so much scru­tiny and try­ing so hard to re­build its rep­u­ta­tion,” said one pub­lic fi­nance source with close ties to the firm. “He was a good leader and worked hard.”

The source said spec­u­la­tion is that a larger re­or­ga­ni­za­tion may be in the works.

Shields had pre­vi­ously worked as man­ag­ing di­rec­tor and Mid­west re­gional man­ager for RBC Cap­i­tal Mar­kets. He re­placed Peter Hill, who left Wells Fargo in April 2017 to lead pub­lic fi­nance at UBS Wealth Man­age­ment Amer­i­cas. He spent two decades in bank­ing at Mor­gan Stan­ley, ris­ing to man­ager of the bank­ing group.

Dur­ing his ten­ure, Shields put his mark on the group, shed­ding some bankers while bring­ing on oth­ers, some of whom he’d worked with at Mor­gan Stan­ley and RBC.

The firm’s staffing head­lines have been mixed this year. Ear­lier in the spring, the bank con­firmed 15 pro­fes­sion­als had left the bank’s pub­lic fi­nance divi­sion, at­tribut­ing the de­par­tures to ad­just­ments over mar­ket con­di­tions and the hir­ing of a new pub­lic fi­nance di­rec­tor.

“We are repo­si­tion­ing the pub­lic fi­nance busi­ness to gain mar­ket share af­ter a strate­gic re­view and a change in lead­er­ship,” a Wells Fargo spokesman said at the time. Staffing changes could leave Wells Fargo up or down 10% in pub­lic fi­nance num­bers by year end, the spokesman said.

The elim­i­na­tion of ad­vance re­fund­ings and re­duc­tion in long-term new money bond sales, which has im­pacted the en­tire sec­tor, was hav­ing a big­ger im­pact on the bank’s mu­nic­i­pal bond side than any fall­out from the fake-ac­counts rev­e­la­tions, firm of­fi­cials said in the May in­ter­view.

Wells Fargo has re­mained in ac­tive hir­ing mode in sev­eral sec­tors an­nounc­ing a string of hir­ers in­clud­ing new hous­ing bankers and pub­lic-pri­vate part­ner­ship and south­ern re­gional bankers, and health­care bankers in the sec­ond half of the year.

The new de­vel­op­ments within the Wells Fargo bank­ing team came as the firm worked to re­cover over the last two years from dam­age from the phony bank­ing ac­counts scan­dal.

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