Wells Fargo board claws back US$75 million from its two former executives

Wells Fargo has announced that it was taking back US$75 million (AU$99 million) from ex-CEO John Stumpf and ex-community bank unit head Carrie Tolstedt. The company's board decided the clawback due to the former executives' little interest in dealing with sales abuses that happened during the time they handled the management. The cross-selling practices resulted in two million fake accounts being created.

According to the report called Independent Directors of the Board of Wells Fargo & Company Sales Practices Investigation Report, employees has opened legions of accounts without customer permission and Tolstedt was in charged of the employees. Before leaving the bank in 2016, she was forced to forgo about US$19 million (AU$25 million). "Tolstedt never voluntarily escalated sales-practice issues and, when called upon specifically to do so, she and the community bank provided reports that were generalised, incomplete and viewed by many as misleading," according to the report.

Tolstedt declined for an interview and she rejected the conclusion revealed by the board. Williams & Connolly lawyer Enu Mainigi said that they strongly disagree with the report. Mainigi added that they disagree the attempt of the report to lay blame with Tolstedt. The lawyer said that a full and fair examination of the facts would produce a different conclusion.

The board panel clawed back an additional pay from Stumpf because he allegedly reacted too slowly in dealing with the scandal that the company was facing during his time. The ex-CEO was not yet giving his comments on the report.

In the 100-page report, it revealed the unethical behaviour of the Wells Fargo employees. It showed that current and former employees were pressured by the unrealistic sales goals imposed by the company that pushed them to the unethical behaviour. According to the report, the employees opened up to two million checking and credit card accounts without the consent of the customers. It was also reported that the employees created phony email addresses that were used to sign up the customers for online banking services. However, the board said that it was common to blame the employees for violating the rules without analysing the reason that led them to do the unlawful act.

It was also revealed in the report that the bank's sales culture problem has been existing since 2002 and Stumpf was aware about the problem in its Colorado branch during that year. The ex-CEO retired in October after he faced the congressional panels due to the scandal.

A total of US$185 million (AU$246 million) was paid in fines by the bank to federal and local authorities. The bank has settled a US$110 million (AU$146 million) class-action lawsuit. It has been under investigation by the Securities and Exchange Commission because of its practices.