Wells Fargo places two top executives on leave in continued fallout from fake-accounts scandal
Wells Fargo & Co. just can’t shake its fake-accounts scandal.
The San Francisco bank said its chief administrative officer, Hope Hardison, and chief auditor, David Julian, will be placed on leave and removed from the firm’s operating committee amid regulatory investigations into the bank’s sales practices.
The leaves of absence aren’t related to the bank’s reported results, the bank said Wednesday in a statement — but the moves show that Wells Fargo is still grappling with management fallout from the scandal, which stems from employees creating millions of checking and other accounts without customers’ approval.
The scandal, linked to onerous sales goals, has led to a bevy of high-profile departures that started with John Stumpf, who was ousted from his job as CEO weeks after the bank announced in September 2016 that it would pay $185 million to settle with the Office of the Comptroller of the Currency and other regulators over the matter. He was replaced by Tim Sloan, a bank veteran who has since borne the brunt of the criticism.
Just this week — after already paying a $1-billion fine this year related to its mortgage and auto-lending practices — the bank paid $65 million to New York state over the accounts issue. And it still faces a bevy of related lawsuits and regulatory probes, including operating under an asset cap ordered by the Federal Reserve while it cleans up its governance practices.
The bank’s struggles to put its problems behind it have led to continued attacks from consumer groups and others. This month, Sen. Elizabeth Warren (D-Mass.) sent a letter to Federal Reserve Chairman Jerome H. Powell demanding the bank’s growth cap remain in place until Sloan is ousted.
With Wednesday’s change, just three of the 10 members of Wells Fargo’s operating committee as of February 2016 remain: Sloan, Chief Financial Officer John Shrewsberry and Avid Modjtabai, who leads the bank’s tech-payments division. Carrie Tolstedt, who led the community bank where the unauthorized accounts were generated, left the committee and the firm in 2016 along with Stumpf.
The two executives are on leave after the Comptroller of the Currency’s office sent letters to each of them, the Wall Street Journal reported, citing people familiar with the matter. The Comptroller of the Currency’s office said that the executives had failed to oversee problems at the bank, the newspaper reported.
Some executives under the two will now report directly to Sloan, including David Galloreese, who joined Wells Fargo in June as head of human resources and will serve on the operating committee.
Wells Fargo said Tuesday that it’s hiring a new technology executive to oversee information security and information technology. This person will also report directly to Sloan and join the operating committee. Wells Fargo also has a new chief risk officer, Mandy Norton, whom it hired this year from JPMorgan Chase & Co.
“During the past two years, we have become more customer-focused, made significant leadership and board changes, strengthened risk management and controls, simplified the organization, and invested in our team members,” Sloan said in Wednesday’s statement.
Wells Fargo is searching internally and externally for a new chief auditor, and Kimberly Bordner, current executive audit director, will serve as Julian’s replacement in the interim.
Wells Fargo shares closed up 3.4% to $51.86.
Los Angeles Times staff writer Laurence Darmiento contributed to this report.
2 p.m.: This article was updated with Wells Fargo’s closing stock price.
This article was originally published at 10:55 a.m.
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