Ex-Nebraskan bears brunt of responsibility for Wells Fargo scandal
Apr 12 2017 by Maggie Morrison
Structurally, the bank was too decentralised, with department heads like Tolstedt given the mantra of "run it like you own it" and granted broad authority to shake off questions from superiors, subordinates or lateral colleagues. The 113-page report largely exonerates new CEO Tim Sloan and many deputies. Regional managers were imploring their bosses to drop sales goals, saying they were unrealistic and bad for customers. Inc. raised its position in Wells Fargo & Company by 1.7% in the third quarter.
Wells Fargo acknowledged in its report Monday that it had profited by dipping into customers' authorized accounts to collect fees for the bogus accounts it created.
"Multiple witnesses stated that she did this through employing both effective and appropriate management techniques but also through intense sales pressure, such as a very heavy emphasis on rankings and sales performance", according to the report.
However, it wasn't until December 2004 that Tolstedt was provided a memorandum on the task force's work and even then a detailed content of the report was not "conveyed" in the memo.
"Community bank leadership resisted and impeded outside scrutiny or oversight and, when forced to report, minimized the scale and nature of the problem", the report said".
The internal bank investigation was released just days after an influential shareholder advisory firm said that board members failed to properly oversee the bank and could have done more to prevent "unsound retail banking sales practices".
The board report and executive compensation clawbacks aren't the end of the story on the accounting scandal for Wells Fargo, its CEO told CNBC on Monday. Of the four-Elizabeth Duke, Donald James, Hernandez, and Stephen Sanger (who is now the Wells chairman)-only Duke joined the board after the scandal (in 2015). In all, 5,300 employees were fired due to sales practice violations, a figure the board did not learn of until the bank settled with regulators last September.
Tolstedt and other community bank leaders "were unwilling to change the sales model or recognize it as the root cause of the problem".
ABC News has been unable to reach either of them.
The report also said problems in the bank's sales culture date back to at least 2002, far earlier than what the bank had previously said, and that Stumpf knew about sales problems at a branch in Colorado since at least that year.
"Wells Fargo can not quantify with any degree of confidence how many team members raised concerns to their managers about sales goals", the response read. And Carrie Tolstedt who set the sales goals for the branches. "Certain managers made meeting scorecard requirements their sole objective, a tactic referred to as 'managing to the scorecard, '" the report said.
8 to pay a combined $185 million in fines to resolve regulatory complaints about 1.5 million potentially fraudulent customer checking and 623,000 credit-card accounts.
After his promotion to president in November 2015, Sloan discussed with Tolstedt that "she needed to be more open to change and to resolve the sales practice issues quickly", the report says.
He later boasted of even higher numbers, such as 6.17 in 2014 - as Sen.
ELIZABETH WARREN: This is about accountability. As it responds to the scandal, Wells Fargo is shifting risk personnel to give him more control. It has been under investigation by the Securities and Exchange Commission because of its practices. Investors who are keeping close eye on the stock of Wells Fargo & Company (NYSE:WFC) established that the company was able to keep return on investment at - in the trailing twelve month while Reuters data showed that industry's average stands at 0.00 and sector's optimum level is 0.41. Tolstedt and others also created a sales-focused atmosphere where employees could be fired or severely criticized by supervisors for failing to meet sales goals.
Investigators found no evidence of retaliation in the cases of 11 ex-employees who were publicly identified as whistleblowers in media reports, according to the report.