Recent Posts



No tags yet.

Two Wells Fargo executives take leave of absences related to customer scandals

Two members of Wells Fargo & Co.’s operating committee have taken leaves of absence from their positions, including a Charlotte-based official, the bank said Wednesday.

The departures of David Julian as chief auditor and Hope Hardison as chief administrative officer are linked to the bank’s ongoing fraudulent customer-account scandals. Julian works in Charlotte.

The bank said in its statement the leaves of absence are “related to previously disclosed, ongoing reviews by regulatory agencies in connection with historical retail banking sales practices.”

“These leaves of absence are unrelated to the company’s reported financial results or internal financial controls.”

Julian and Hardison are the latest Wells Fargo executives to be affected by the scandal.

In October 2016, just a month after the scandals surfaced publicly, chairman and chief executive John Stumpf retired from his duties immediately and community bank top executive Carrie Tolstedt was fired.

The board officially put the bulk of the blame on Tolstedt, who was described retroactively as fired with cause, and on Stumpf.

The board determined that an insular community banking division, led by Tolstedt, and top executives’ devotion to aggressive customer cross-selling practices formed the culture that enabled the practices to take root. For decades, the community banking unit operated in a decentralized system, with limited oversight from senior executives.

The board increased the amount of executive compensation clawbacks from Stumpf and Tolstedt by an additional $75 million.

The total executive compensation clawback has risen to more than $180 million.

A $142 million settlement was approved in 2017 for a class-action lawsuit settlement.

At least 1.5 million potentially fraudulent customer checking and 623,000 credit-card accounts were opened by branch employees and managers in customers’ names, primarily in the Los Angeles and Arizona markets.

The bank has said it cannot rule out that 38,722 unauthorized customer accounts were established in North Carolina and 23,327 in South Carolina.

Wells Fargo acknowledged in April 2017 that the scandal dates back nearly 15 years to May 2002.

The increased settlement amount is on top of the $185 million the bank agreed to pay to resolve regulatory complaints about the fraudulent accounts.

David Galloreese will take over chief administrative office duties while continuing as head of human resources. He will join the organizing committee.

Kimberly Bordner, currently executive audit director, will become the company’s acting chief auditor.

“Because of the depth of our management team, we are confident in our ability to ensure an effective transition,” chief executive Timothy Sloan said. “During the past two years, we have become more customer-focused, made significant leadership and board changes, strengthened risk management and controls, simplified the organization, and invested in our team members.”

via Winston-Salem Journal

#wellsfargo #litigation

© 2020 by Nordic Star Law. All rights reserved. No Attorney Client Relationship.