Wells Fargo orders former execs to pay back $75 million

Wells Fargo's 'Jump into January' a grim start to year; damning report reveals a 'breeding ground for bad behavior'

Wells Fargo claws back another $75m from former bosses

Wells Fargo's board said on Monday (Tuesday AEST) that it would claw back an additional $US75 million in compensation from the two executives on whom it pinned most of the blame for the company's scandal over fraudulent accounts: the bank's former chief executive, John Stumpf, and its former head of community banking, Carrie Tolstedt.

Many current and former employees have talked of intense and constant pressure from managers to sell and open accounts, and some said it pushed them into unethical behavior.

California and Arizona cited as having a "considerably higher" number of unauthorized accounts per employee.

In addition to clawing back compensation from Stumpf and Tolstedt, the bank on February 28 reduced compensation for eight current executives by $32 million, including eliminating 2016 bonuses and halving 2014 performance payouts. It has been under investigation by the Securities and Exchange Commission because of its practices.

The board's report recommended that Stumpf and Tolstedt have more of their compensation clawed back for their negligence and poor management. Yet if Stumpf and Tolstedt are allowed to walk away from the colossal mess they created with millions in their pockets, what kind of message does it send to people in or outside of banking who behave ethically and honestly?

The bank has fired five senior retail bank executives, including Tolstedt, over the scandal and imposed forfeitures, clawbacks and compensation adjustments on senior leaders now totaling more than $180 million, including $69 million from Stumpf and $67 million from Tolstedt.

The report said management did not identify sales practices as a "noteworthy risk" to the board until 2014, after a 2013 Los Angeles Times story on the issue.

The company also split the roles of chairman and CEO.

Sloan, who took the helm in October, announced the hiring spurt on a conference call with journalists Monday as he ticked off reforms and promised managers are learning from a scathing 113-page report the board issued hours earlier on the long-running abuses.

"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.

In a particularly damning statement, the investigators said Carrie Tolstedt, head of the community bank division, and her senior staff "paid insufficient regard to the substantial risk to Wells Fargo's brand and reputation from improper and unethical sales practices", even as they overlooked financial or other harm to customers.

Sanger said Monday that the board will not fire management who may have been previously linked to the scandal amid the report's release.

The report was the culmination of a six-month investigation by the bank's independent board members and comes as Wells Fargo struggles to move beyond the sales scandal.

According to the investigation, board member Enrique Hernandez Jr., chair of its risk committee, took a proactive stance in trying to learn about the sales misdeeds and criticizing Tolstedt. But while the panel's public report may help rebuild shareholder trust, the firm still faces more government probes, as well as legal claims by employees who said they were unfairly punished.

Notably, Sloan said that the bank actually had hired back roughly 1,000 employees who may have been dismissed for not meeting those unrealistic sales quotas, or those who may have left on their own accord because they did not want to violate their ethics.

Give Wells Fargo credit for responding to its recent blunders, which include the creation of some 2 million bank accounts that were set up without customers' consent.

In an interview with MinnPost, Ellison said that the bank's estimates could be conservative, and that more Minnesotans could have been affected. According to one director, Stumpf praised Tolstedt as the "best banker in America". Independent members of the banks' board launched an investigation.

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