Former Wells CEO Stumpf Charged $17.5MM, Prohibited from Banking

The Office of the Comptroller of the Currency issued a notice of charges against five former senior executives of Wells Fargo and announced settlements with the bank’s former chief executive officer and other members of the bank’s operating committee.

The OCC announced the issuance by consent of a prohibition order and a $17.5 million CMP against former bank Chairman and CEO John Stumpf; a personal cease and desist order and a $2.25 million civil money penalty against the bank’s former Chief Administrative Officer and Director of Corporate Human Resources Hope Hardison; and a personal cease and desist order and assessment of a $1.25 million CMP against its former Chief Risk Officer Michael Loughlin for their roles in the bank’s sales practices misconduct.

In making the determination to file the notice of charges and enter into these settlements, the OCC considered, among other things, the culpability of these individuals and their financial resources, including compensation previously clawed back by the bank.

“The actions announced by the OCC today reinforce the agency’s expectations that management and employees of national banks and federal savings associations provide fair access to financial services, treat customers fairly, and comply with applicable laws and regulations,” stated Comptroller of the Currency Joseph Otting.

The charges stem from the executives’ role in the bank’s systemic sales practices misconduct. The executives and relief sought include:

  • Carrie Tolstedt, Head of the Community Bank, Prohibition Order and $25 million Civil Money Penalty
  • Claudia Russ Anderson, Community Bank Group, Risk Officer, Prohibition Order and $5 million CMP
  • James Strother, General Counsel, Personal Cease & Desist (PC&D) Order and $5 million CMP
  • David Julian, Chief Auditor, PC&D Order and $2 million CMP
  • Paul McLinko, Executive Audit Director, PC&D Order and $500,000 CMP

The notice of charges alleges these executives failed to adequately perform their duties and responsibilities, which contributed to the bank’s systemic problems with sales practices misconduct from 2002 until October 2016. The misconduct of these individuals allowed the practices to continue for years, affecting millions of bank customers and thousands of lower level bank employees. Additionally, the notice states that Russ Anderson also made false and misleading statements to the OCC and actively obstructed the OCC’s examinations of the bank’s sales practices.

Based on the facts and circumstances of each individual’s actions, the relief sought may include a lifetime prohibition from participating in the banking industry, a personal cease and desist order, and/or CMP. A personal cease and desist order would require the individual to take certain affirmative actions or refrain from certain conduct in any future involvement in the banking industry. Pursuant to federal law, the respondents may request a hearing challenging the allegations and relief sought by the OCC.

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