OCC slaps serious sanctions on Wells Fargo as fake account fallout continues
Now needs approval before making executive changes; golden parachutes banned
The Office of the Comptroller of the Currency slapped a series of sanctions on Wells Fargo that were previously excluded from its settlement with the megabank over the fake account scandal that recently shrouded the bank in controversy.
Back in September, the OCC, along with the Consumer Financial Protection Bureau and the city and county of Los Angeles, fined Wells Fargo $185 million for more than 5,000 of the bank’s former employees opening more than 2 million fake accounts in order to get sales bonuses.
The OCC portion of that fine was $50 million. But for currently unknown reasons, the OCC announced late Friday that it is placing several new sanctions on Wells Fargo that were previously excluded from its settlement with the bank.
Chief among those sanctions is that the bank is now required to ask the OCC for approval if it wants to make a change to its board of directors or its senior executive officers.
Wells Fargo is also now prohibited from providing “golden parachute” payments to any departing executives or board members.
According to Bloomberg, banks are typically granted relief from these types of sanctions as part of settlements with regulators, as they were in Wells Fargo’s initial settlement with the OCC, but now the OCC is dropping the hammer on Wells Fargo.
The restriction on golden parachutes, which are payments made to executives or board members as they leave the company, is interesting, considering the amount of heat that Wells Fargo took over the “retirement” of Carrie Tolstedt, the former head of Wells Fargo unit responsible for the fake account scandal.
During Stumpf’s testimony, several senators questioned how the bank allowed Tolstedt to "retire" in the midst of the scandal with $124 million in compensation.
Later, the independent directors of Wells Fargo’s board ordered Tolstedt and Stumpf to forfeit millions in bonuses and compensation.
Stumpf was required forfeit all of his outstanding unvested equity awards, which were valued at approximately $41 million at the time.
Tolstedt was also ordered to forfeit all of her outstanding unvested equity awards, valued at approximately $19 million.
Tolstedt will also not receive a bonus for 2016 and will not be paid severance or receive any “retirement enhancements” in connection with her separation from the company, the board members said.
Stumpf later stepped down as CEO, and the bank named Tim Sloan, the bank’s president and chief operating officer, to succeed Stumpf as CEO.
But now, any such move will require prior approval from the OCC.
In similar statements provided to Reuters, Bloomberg, and the Wall Street Journal, Wells Fargo spokesperson Jennifer Dunn said the OCC sanctions will not prevent the bank from pursuing its current strategy.
“We continue to cooperate with the OCC as well as all our regulators and will comply with these requirements,” Dunn told Bloomberg. “This will not inhibit our ability to execute our strategy, rebuild trust and serve our customers, and continue to operate the company for the benefit of all our stakeholders.”
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