Wells Fargo claws back $75 million from top executives in sales scandal
05:10, Apr 11, 2017
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Denver Investment Advisors LLC cut its stake in Wells Fargo & Co (NYSE:WFC) by 5.7% during the fourth quarter, according to its most recent 13F filing with the Securities and Exchange Commission (SEC). Last week, two proxy advisory firms recommended shareholders vote against retaining several members of the board.
But executives outside the community bank, including Chief Risk Officer Michael Loughlin, grew concerned after learning of the figure in April 2014 and summoned Tolstedt to a meeting that month. What's more, the board accused Tolstedt of being callous and indifferent to the potential harm she was causing: "There is no evidence that Tolstedt showed serious concern about the effects of improper sales practices on Wells Fargo's customers", it wrote. Current price places the company's stock 7.56% away from its 200-day simple moving average, -4.07%, away from the 50-day average and also -3.18% away from 20-day average.
Still, the board said that once Wells Fargo management did take action, the steps were "incremental, implemented slowly and insufficient" to fix the root of the problem. According to one director, Stumpf praised Tolstedt as the "best banker in America".
The report said that Stumpf was hesitant to criticize Tolstedt and to let her go even after two directors urged him to do so in December 2015.
But Carrie Tolstedt on Monday rejected the investigation's findings. A lawyer for Stumpf declined to comment on the report.
Wells Fargo said Tolstedt had been fired for cause and it would cancel approximately US$47 million worth of stock options held by her.
The most senior bank examiner for Wells Fargo & Co (WFC) has been removed by a US regulator in wake of bank's illegal accounts scandal; according to people familiar with matter told Reuters this week.
Citigroup Inc (NYSE:C): now trading just 4.9% below its 52-week high, the 1812-founded bank beat earnings expectations in all four quarters of 2016, driven by strong performance of its institutional-clients-oriented-investment banking and trading-operations that saw profits almost double in 2016, while Citi's consumer business, which accounts for a third of the group's profits, saw a high-single-digit decline. "A full and fair examination of the facts will produce a different conclusion", Enu Mainigi, Williams & Connolly LLP, attorneys for Tolstedt, said in a statement. The board "should have been more forceful in pushing Stumpf to change leadership", the committee concluded.
Sloan said he supported the board's actions on the cash bonuses and believes "they are critical to Wells Fargo's commitment to our customers".
The board was unrelenting in their criticism of Stumpf and Tolstedt, saying that both, when presented with the growing problems in Wells' community banking division, were unwilling to hear criticism or consider changes in behaviour.
And that Stumpf knew about sales problems at a branch in Colorado since at least that year.
Ms. Tolstedt stayed for another six months before being moved out of her role.
Those accounts were opened by branch employees and managers in customers' names to meet sales targets.
"(He) was too slow to investigate or critically challenge the sales practices at the community bank and to appreciate the seriousness and the substantial reputational risk to Wells Fargo".
ILLEGAL ACTIVITY NOTICE: "Denver Investment Advisors LLC Has $2.491 Million Stake in Wells Fargo & Co (WFC)" was first published by The Cerbat Gem and is the sole property of of The Cerbat Gem.
Employee terminations had begun as early as 2002, when nearly every worker at a branch in Colorado was found "gaming" targets - including issuing unauthorized debit cards - while participating in an internal promotion, according to the report. In February, the bank announced the firing of four retail banking executives related to the scandal.
Wells Fargo & Company is a diversified, community-based financial services company with $1.9 trillion in assets. Royal Bank of Canada reaffirmed a "buy" rating and issued a $52.00 price target on shares of Wells Fargo & Co in a report on Wednesday, January 11th. Last week, Wells CEO Tim Sloan posted an open letter listing some of the actions the bank has taken, including eliminating product sales goals for retail bankers.