Published: Tue, April 18, 2017
Business | By Max Garcia

Getting Up to Speed on Wells Fargo Sales Scandal

She had declined to be interviewed for the investigation.

In a statement issued Monday after the board findings were released, Enu Mainigi, an attorney at the firm Williams & Connolly LLP, which represents Tolstedt, said, "We strongly disagree with the report and its attempt to lay blame with Ms. Tolstedt". The lawyer said that a full and fair examination of the facts would produce a different conclusion. Stockholder advisory group Institutional Shareholder Services recently recommended that Wells Fargo shareholders vote against re-election for 12 of the company's 15 directors. African Americans are a part of this customer base for Wells Fargo bank. It said that workers felt they couldn't meet the bank's unrealistic sales goals "without gaming the system".

"The trust customers, employees and investors place in Wells Fargo is paramount, and our work to rebuild and strengthen those relationships continues in earnest", Sanger said.

Sloan promised during the conference call on Monday that Wells Fargo will "learn from these mistakes that are right there in black-and-white in this exhaustive board report".

For a lack of a better description, management appeared to not care that employees were opening duplicate accounts or issuing products to customers that they did not want, as long as employees were making their numbers. Supervisors don't run it like they own it.

Sloan said the board did a very comprehensive report, but acknowledged there are still activities ongoing in the Justice Department and other government agencies.

"There's a tremendous amount of pressure from regulators to throw someone under the bus", said Duke Law School professor James Cox, who specializes in corporate and securities law.

As the problems with Wells' sales culture ballooned, management still remained callous to the problems or even actively worked to hide it.

In Tolstedt's case, it's being taken from outstanding stock options.

But while Tolstedt's total clawbacks, at $67 million, are slightly less than the $69 million that Stumpf lost, there is no question that she is the one painted as the true villain in the board's report. And Carrie Tolstedt who set the sales goals for the branches. The ex-CEO was not yet giving his comments about the report.

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.

The board's report, which praised the changes the bank had made since the sales scandal erupted into public view, is unlikely to quell the bank's critics.

On Sept. 27, the company said Tolstedt had "left the company". Most of the employees that were fired admitted that they engaged in misconduct, but frequently said they did so because of the culture at the bank, the report said.

"Even when challenged by their regional leaders, the senior leadership of the community bank failed to appreciate or accept that their sales goals were too high and becoming increasingly untenable", according to the report. Six months later he told her to step aside. "I wish we would have ended the incentive compensation plan that we had in our community bank".

The investigation report depicts the board as nearly entirely supine as Stumpf and his management team obfuscated and tried to explain away emerging information about the bogus account scandal-some of which cropped up even before The Times' article.

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