Former Wells Fargo CEO John Stumpf has been handed over a lifetime ban from the banking industry. He was also fined USD 17.5 million for his involvement in a fake accounts scandal. This is first of its kind incidence when a regulator has fined top banking executives for sales practices misconduct. The amount is the largest ever penalty received by the regulator from an individual. The United States Office of the Comptroller of the Currency has also fined seven other former executives of Wells Fargo for about USD 40 million in civil penalties. They all have been fined for what the OCC described as multiyear systemic sales practice misconduct. Stumpf retired as CEO in 2016 when scandals started coming to the fore. Earlier, he had forfeited USD 70 million in compensation.
According to the federal agency, the executives failed to effectively perform their duties and responsibilities. This led to the scandal and wrong practices in the bank from 2002 to October 2016. The charges were framed after it was revealed that several bank accounts were opened to meet the targets. Wells Fargo has already accepted that millions of bogus credit cards and bank accounts were open to achieve unrealistic sales goals. “The misconduct affected millions of customers and thousands of bank employees,” the Office of the Comptroller of the Currency said. Wells Fargo has already paid fines of about USD 4 billion caused by the wide-ranging sales schemes.
The bank accepted that the practice caused inconvenience for customers like they were forced to pay for the insurance that was not required. This led to the repossession of vehicles of several service members. Wells Fargo’s CEO Charles Scharf said that we should hold ‘individuals and ourselves’ responsible. “Actions taken by the OCC are consistent with our belief that a very large part of our Community Bank’s operating model was flawed,” Scharf said in a statement. Scharf was appointed CEO of Wells Fargo in October last year after a six-month-long search for a replacement for former head Tim Sloan. Sloan was CEO of the bank from late 2016 to March 2019. He had exited the bank after failing to convince regulators and lawmakers that the work culture of the bank had significantly changed.