Published: Sat, September 17, 2016
Economy | By Melissa Porter

Activist Needmor calls on Wells Fargo to split Chair-CEO roles

Total refunds, the bank said last week, amounted to about $2.6 million.

It is notable that a bank the size of Wells Fargo could engage in such practices over a number of years without the federal government pursuing criminal prosecution. After the scandal came to light last week, in which Wells Fargo employees created almost 2 million accounts for customers without their knowledge in order to meet internal sales targets, the bank has let go of 5,300 employees.

Sen. Bob Menendez continued his calls for greater accountability after Wells Fargo was fined $185 million for allegedly illegally opening unauthorized accounts for its customers. The fines also are not that much more than the $125 million one of its top executives, Carrie Tolstedt, will walk away with when she retires this year.

USA attorneys in NY and San Francisco have opened criminal inquiries, the person said, adding that under Justice Department guidelines, investigators will look into both potential corporate and individual wrongdoing.

Bank employees say that Wells Fargo Bank isn't the only bank where employees carry out questionable and predatory sales policies, according to a report released earlier this summer.

The agreement also requires Wells Fargo to work with an independent consultant to conduct a thorough review of its procedures to ensure proper sales practices.

"We're talking about a scandal here that involves thousands of their employees cheating tens of thousands of customers out of money and making millions of dollars doing it for the bank", she said.

The investigation was first reported by the Wall Street Journal.

"This Wells Fargo scandal has become Exhibit No. 1 for those who support a tough clawback rule", said Ian Katz, who tracks regulatory developments at Capital Alpha Partners in Washington.

Regulators stopped short of accusing Wells Fargo executives of encouraging employees to open unauthorized accounts, but said the badly structured incentives and lack of oversight pushed employees to game the system, either to improve their pay or to keep their jobs.

For its part, Wells Fargo, the nation's largest bank by market value, neither admitted nor denied wrongdoing.

California and US regulators fined San Francisco-based Wells Fargo & Co. a combined $185 million last Thursday.

Warren's remarks set the stage for what's expected to be a contentious Senate Banking Committee hearing Tuesday, where Wells Fargo CEO John Stumpf is scheduled to appear.

The senators ask for a response before September 19, a day before Stumpf is scheduled to appear before the Senate Banking Committee. "That's what I want to hear from him".

Many activist investors have been vocal on the issue and brought forward their older argument of breaking up the big banks.

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