The Wells Fargo Fraudulent Account Scandal Fallout Continues

wells fargoThe decision is final and unanimous! The Wells Fargo board of directors fired four senior executives as their investigation into the fraudulent account scandal continues. On Tuesday, February 21, 2017, the board said it has fired, the former community bank, chief risk officer Claudia Anderson, the lead regional president in AZ Pamela Conboy, the former regional president in Los Angeles Shelly Freeman, and head of the community bank’s strategy and initiatives, Matthew Raphaelson. The Santa Cruz Sentinel also reported that the latest move by Bank officials is just the most recent, and more changes are expected.

In today’s commonplace fear of identity theft, phone scams and a blatant disregard for the property of others, who could have imagined the criminal acts of one of the nation’s largest financial institutions! For the first time in several years, the fraudulent accounts’ scandal rocked Wall Street and Washington. Over five thousand Wells Fargo employees lost their jobs for setting up two million fake customer and credit card accounts. The scandal about the fraudulent accounts at Wells Fargo broke in the latter part of 2016. Former CEO John Stumpf faced several days of questioning by the House panel, during which he admitted fault and sincerely apologized, according to CDA News. However, the apology may have been seen as an attempt to appease those who were outraged and relieve some pressure after his prior defiance of the allegations.

Not only have the four executives lost their jobs, but they also will not receive a bonus for 2016, and according to USA TODAY, each of them will forfeit all of their vested outstanding stock options and unvested stock. The ongoing internal investigation is expected to be completed by April, which is the annual stockholder meeting. The company intends to make their findings public. The 5300 low-level employees who lost their jobs for their role in the fraudulent scandal, continues to point blame to Wells Fargo executives. It is highly unlikely that any of them received the types of payouts as the ousted executives. Former CEO Stumpf unexpected resigned in October. However, he was also given a $134 million payout. The former head of the community banking division, which was at the heart of the scandal, Carrie Toldstedt did not leave empty handed; her estimated payout was over $124 million.

Industry experts believe the Wells Fargo board is continuing to demonstrate a genuine concern for the bank’s reputation and consumer trust. Analyst Marty Mosby, with Vining Sparks, says, “It’s encouraging that the board of directors is taking this seriously, and they are putting everything on the table and trying to loo at this with a clear vision of what really happened.” Ater the announcement of the latest firings, the company’s share price rose 0.3 percent to close at $58.25. Thus far in 2017, the stock is up nearly six percent. The increase is a welcome sign since shortly after the scandal had broken the bank’s shares tumbled to $43.75 in October. Additionally, account openings dropped 44 percent, fell an even further 41 percent in November, and in December new account openings fell 31 percent compared to the previous year.

“We have more work ahead,” says Mary Mack, the head of community banking. She also revealed their focus is on, “strengthening our relationships with existing customers and building new ones with potential customers.” According to Forbes, the comments were made last week by the Wells Fargo official, and she also alluded to the new emphasis on customer service and the elimination of sales goals, the same pressure-ridden goals that incited the scandal in the first place.

By Jireh Gibson

Sources:

Forbes: Wells Fargo Fires Four Senior Managers Amid Phony Account Scandal Investigation
CDA NEWS: Wells Fargo CEO in Hot Seat With House
USATODAY: Wells Fargo fires four managers over unauthorized accounts scandal
Santa Cruz Sentinel: Wells Fargo fires executives amid accounts scandal
Top and Featured Image Courtesy of Mike Mozart’s flickr page – Common Courtesy License

Leave a Reply

Your email address will not be published.