Senators Press Wells Fargo on Whether or Not CEO Knew of Tactics -- Update
21 October 2016 - 10:01AM
Dow Jones News
By Aruna Viswanatha
Wells Fargo & Co.'s political problems continue to
mount.
In a letter Thursday to Wells Fargo's chairman, Sen. Elizabeth
Warren (D., Mass.) asked the directors whether they had
sufficiently questioned Timothy Sloan about his knowledge of the
bank's sales-tactics scandal -- what he knew and when he knew it --
before he was appointed the new chief executive officer.
The letter, co-written with Sen. Robert Menendez (D., N.J.),
also asked whether Mr. Sloan's predecessor, John Stumpf, would
receive any retirement benefits after abruptly leaving the bank
earlier this month.
Mr. Stumpf's departure, announced on Oct. 12, followed a $125
million settlement with regulators over bank employees opening as
many as two million accounts for customers who didn't authorize.
The scandal, which took place over a number of years, landed Mr.
Stumpf at the witness table at two heated congressional hearings.
Ms. Warren asked many of the most pointed questions at the Senate
hearing.
Mr. Sloan, who immediately took over, is a Wells Fargo veteran
who was serving as the bank's chief operating officer.
"It is difficult to believe that [Mr. Sloan] had no knowledge of
or bears no responsibility for the actions of thousands of Wells
Fargo employees creating fake accounts...we continue to have
questions about who is being held accountable at Wells Fargo," the
lawmakers wrote to Wells Fargo Chairman Steven Sanger.
A spokesman said the board's independent directors "appreciate"
the senators' concerns and will "follow the facts" wherever the
board's independent investigation of the matter leads.
"The board of directors has great confidence in Tim Sloan's
leadership. He has strong relationships with our stakeholders and
is committed to addressing cultural issues and improving systems
and processes so this conduct does not occur again," the spokesman
said in a written statement.
In their letter, the lawmakers also asked about Mr. Stumpf's
pay. "What will happen with Mr. Stumpf's compensation dating from
the time when wrongdoing at Wells Fargo was first reported?," they
wrote.
Wells Fargo's board, at Mr. Stumpf's own recommendation, had
previously decided he should relinquish $41 million in unvested
equity, one of the biggest-ever forfeitures of pay by a bank chief.
He still retires with tens of millions of dollars earned during
roughly 35 years at the bank.
"Mr. Stumpf will walk away from Wells Fargo with $133.1
million...if Mr. Stumpf stays on the Wells Fargo payroll as a
"consultant," he could receive benefits -- including a personal
driver -- worth $200,000 over the next two years," the letter
said.
Bank representatives couldn't immediately be reached for comment
on the letter. The bank has said it regrets the improper behavior,
has ended sales goals for retail-bank employees and has been
refunding customers improperly charged.
The pair asked the bank to respond by Oct. 27.
Sen. Warren's comments to Mr. Stumpf at the Sept. 20 Senate
hearing over the scandal, became a defining moment in the fallout:
"It's gutless leadership...you should be criminally investigated,"
she told him.
Mr. Menendez also pressed Mr. Stumpf at the hearing, reading an
email that he said was written to Mr. Stumpf in 2011 by a Wells
Fargo employee, reporting concerns about cross-selling pressure.
When Mr. Stumpf said he didn't remember that, Mr. Menendez replied,
"Well, she was fired."
In the Thursday letter, Sen. Warren extended her criticism. "If
Mr. Stumpf is simply replaced by another top company executive who
was aware of, but did nothing to prevent the widespread fraud that
harmed hundreds of thousands of Wells Fargo customers and
shareholders, then the bank is turning its back on accountability,"
the two lawmakers wrote.
Write to Aruna Viswanatha at Aruna.Viswanatha@wsj.com
(END) Dow Jones Newswires
October 20, 2016 18:46 ET (22:46 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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