Wells Fargo Fires Forex Bankers Amid Internal Investigation -- Update
21 October 2017 - 4:36AM
Dow Jones News
By Emily Glazer
Wells Fargo & Co. has fired four foreign-exchange bankers
amid an investigation into that business by both the bank and
regulators, according to people familiar with the matter and the
bank.
The firings and investigation are the latest problem to hit
Wells Fargo, which has been grappling for the past year with the
fallout from its sales-practices scandal. This summer, the bank
disclosed that a review of its businesses in the wake of that
scandal had also revealed problems related to improperly charging
customers for certain auto insurance and mortgage products.
The bank's issues, though, had mostly been confined to the
retail-banking business. The foreign-exchange investigation now
shows there is also trouble in Wells Fargo's investment-banking
arm. The issues have emerged separate from a review of business
practices in the wake of the sales-practices scandal, according to
a person familiar with the matter.
A Wells Fargo spokeswoman confirmed the firings after inquiries
from The Wall Street Journal.
Separately, the Office of the Comptroller of the Currency
earlier this week sent a confidential report to Wells Fargo about
the auto-insurance product issues. That said the bank may need to
refund to customers more than the $80 million the bank had
previously cited, according to a person familiar with that
matter.
The foreign-exchange firings come just weeks after Wells Fargo
chief Timothy Sloan was castigated during a Senate Banking
committee hearing for the bank's conduct and culture, such as how
problems happened for many years and why more wasn't done to stop
them. Sen. Elizabeth Warren (D., Mass.) said more had to be done at
the bank in light of recent problems that have emerged and she
called for Mr. Sloan's firing.
Mr. Sloan defended the bank and its handling of problems,
pointing to a number of changes he has made over the past year in
the operations of the retail-banking business.
It isn't yet clear what issues drove the firings in Wells
Fargo's foreign-exchange business. But the bankers involved were
fired for cause, according to a person familiar with the
matter.
The terminations occurred as the bank is conducting an internal
investigation and as federal regulators have been examining
practices in the business, according to a person familiar with the
matter.
Those fired, the people said, were Simon Fowles, recently head
of foreign exchange trading; Bob Gotelli, recently head of foreign
exchange sales; Jed Guenther, recently a regional head of foreign
exchange; and Michael Schaufler, chief spot dealer.
The bankers didn't immediately respond to requests for comment
or declined to comment.
The prior head of the foreign exchange group, Sara
Wardell-Smith, was moved to a different role at the bank, the
people said. Ms. Wardell-Smith's LinkedIn profile refers to a role
beginning in October leading part of Wells Fargo's financial
institutions group. She had held several roles in the bank's
foreign-exchange group after joining Wells Fargo in 1995 and led
the group for the past decade.
Ms. Wardell-Smith didn't respond to requests for comment.
The bank spokeswoman said Ms. Wardell-Smith accepted a new
position as Americas regional leader in Wells Fargo's financial
institutions group. She added that the bank's foreign-exchange
business "will continue to serve our clients under the leadership
of Ben Bonner."
Wells Fargo's investment-banking, securities and markets
division, known as Wells Fargo Securities, is a fraction of the
size of its U.S. big-bank peers. Its U.S. investment-banking market
share is just about 4% as of September, according to research firm
Dealogic.
And Wells Fargo's foreign-exchange desk doesn't do as much
business as other banks, industry participants have said. Wells
Fargo doesn't break out financial results or metrics for that
group.
Unlike many other big banks, Wells Fargo's foreign-exchange
operations weren't caught up in investigations into collusion
between market participants to move foreign-currency rates for
their own financial benefit. Those investigations led to more than
$5 billion in combined penalties at U.S. and European banks and a
guilty plea to criminal charges.
In regard to the retail-bank problems, the report sent to the
bank by the OCC this week said Wells Fargo was too slow to identify
and correct problems related to auto-insurance products known as
collateral protection insurance, a person familiar with the matter
said. The OCC report was first reported by the New York Times.
The OCC did acknowledge that the bank has ended the
auto-insurance practices, changed management and restructured the
group responsible for the sales.
An OCC spokesman declined to comment on ongoing supervisory
matters.
Another Wells Fargo spokeswoman reiterated that the bank
discontinued the product at issue.
"We will continue to work with regulators on the remediation and
will make improvements to our auto lending business," the
spokeswoman said.
Write to Emily Glazer at emily.glazer@wsj.com
(END) Dow Jones Newswires
October 20, 2017 13:21 ET (17:21 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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