Published: Fri, October 14, 2016
Economy | By Melissa Porter

Wells Fargo CEO retires amid scandal

Wells Fargo CEO retires amid scandal

Given the comments from these lawmakers following the announcement of Stumpf's retirement, it is unlikely they will drop the pursuit. One week after the MA senator tore into Stumpf for his "gutless leadership", the executive forfeited $41 million worth of stock and salary to appease his critics. Before the day was over, Wells Fargo announced Stumpf's resignation and the appointment of President and Chief Operating Officer Tim Sloan to succeed him. He noted that this is an "open question" as Wells Fargo has traded at a premium valuation when compared to other banks. Lead
director Stephen Sanger will serve as the board's non-executive chairman. The new CEO will also have to deal with investigations of regulators related to bank practices that would open millions of fictitious accounts on behalf of clients without requiring them approval.

Wells Fargo & Co (NYSE:WFC) has received another blow in the midst of chaos that ensued when the federal authorities began to investigate the bank's conduct regarding fake customer accounts.

Wells Fargo's CEO resignation on Wednesday marked the latest step in the bank's efforts to recover from a major sales scandal.

Wells' settlement on September 8 with the Consumer Financial Protection Bureau, Office of the Comptroller of the Currency and a Los Angeles prosecutor revealed that the bank fired 5,300 employees for improper practices and is now working to retool risk-management protocol as well as pay incentives and training for workers.

A spokesman for Wells Fargo said that Stumpf would not receive severance pay when he departed the company. Sherrod Brown, Ohio, the ranking Democrat on the Senate Banking Committee.

The $185 million penalty - paid to the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency, and to the City and County of Los Angeles - amounts to less than 5 percent of the $3.72 billion Wells Fargo raked in a year ago in credit and debit card fees alone. Despite giving up $41 million-the largest compensation forfeiture from a major US bank chief since the 2008 financial crisis-and not receiving any severance, according to public filings, the former C.E.O. will walk away with about $134.1 million. Tolstedt's departure was followed by uproar after Tolstedt left with stock-based compensation of almost $90 million.

In less than two weeks of the allegations being leveraged against it, the FBI and federal prosecutors in NY and California began probing the bank, the House Financial Services committee launched an investigation and Stumpf faced blistering questions in front of the Senate Banking Committee. Elizabeth Warren - by the SEC and Department of Justice could also ensnare Sloan, as noted by JPMorgan bank analyst Vivek Juneja.

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