Wells Fargo Executives Leave Amid Legal Scandal
Two top executives at Wells Fargo & Co. have been asked by the bank to go on leave and step back from their roles on the Operating Committee. Wells Fargo and Co. announced this and it is in connection to the ongoing regulatory reviews into the bank’s retail sales practices.
The bank however, declined to comment on the reason for the move to send these two executives, Hope Hardison the Chief Administration Officer and David Julian the Chief Auditor during this announcement via a press release. Wells Fargo also refused to confirm if they were still actively employed with Wells Fargo Bank.
Hope Hardison worked with Wells Fargo for 24 years and assumed the role of Chief Administration Officer in 2015. David Julian joined Wells Fargo when the companies merged with Wachovia Corp and according to LinkedIn; he became the Chief Auditor in 2012.
The bank’s Chief Executive, Tim Sloan mentioned that despite the sales scandal, Wells Fargo is confident on their ability to make sure of an effective transition owing to the depth they have in the bank’s management. He also said in the past two years, the bank has become more customer-focused and significant board and leadership changes have been made, risk management and controls have been strengthened, and the organization is more simplified with more investments made on team members. Wells Fargo has expressed it’s resolve to focus on making things right for customers.
The Beginning of The Wells Fargo Sales Scandal
The woes of Wells Fargo started in late 2016, with the uncovering of millions of fake accounts which were opened without customers’ knowledge or consent. Wells Fargo has been coping with this fallout of this sales scandal since then as many bankers used such fake accounts to face lofty sales targets. An investigation has been made into the bank’s purchase of low-income housing tax credits. Investigations have been made to know whether Wells Fargo and other American banks conspired in cohorts with real-estate developers to lower the bids on the tax credits in order to increase the return on the banks’ investment. It is typical for companies to purchase those particular credits to help lower their bill for federal income taxes and the developers who go on to sell them can then use the money in the construction of housing in low-income developments. Wells Fargo Dealer Services also faced a highly publicized scandal as it was announced they were responsbile for more than 500,000 Wells Fargo Dealer Services customers being charged for unwanted Auto Insurance. It seems the last few years have been faced with sales scandals and White-Collar Crime from executive leadership at Wells Fargo & Co. An internal review of Wells Fargo’s auto dealer services and lending found more than 500,000 clients may have unwittingly paid for protection against vehicle loss or damage while also making monthly loan payments. This was despite the fact that many drivers already had their own auto insurance policies in place. Wells Fargo said in a statement that it may pay as much as $80 million to affected clients — with extra money for as many as 20,000 who lost cars, “as an expression of our regret.”
The bank was slammed in April, with several penalties which include a $1 billion fine by the Office of the Comptroller of the Currency and Consumer Financial Protection Bureau.
Also, in February a $1.95 trillion cap on assets until next year was set by the Federal Reserve System with a set of requirements in risk management as part of the consent order. A number of angry customers have also filed several class-action lawsuits against Wells Fargo.
In relation to the sales scandal, New York Attorney General Barbara Underwood says Wells Fargo failed to open up to its investors that its cross-selling successes with products was driven by the same fraudulent sales practices. Wells Fargo agreed to pay $65 million in a New York-based settlement related to cross-selling practices.