Wells Fargo Claws Back $41 Million in Stock From CEO
Sep 29 2016 by Michele Stevens
Wells Fargo CEO John Stumpf has agreed to forfeit his equity awards valued at around $41 million amid internal investigation into illegal banking practices, the bank said Tuesday.
An independent board has been set up by the bank to run the investigate the allegations and law firm Shearman & Sterling LLP has been drafted in to support. Visit MarketWatch.com for more information on this news.
That review is just the latest sign that San Francisco-based Wells Fargo will be grappling with the fallout from this case for some time to come.
Stumpf was also well-known in the banking industry for his company's ability to sell products to customers.
The company fired 5,300 employees who were involved in the scandal, while US and California regulators fined the company $185 million.
Wells Fargo fired more than 5,000 bank employees for opening the sham accounts, and there's now a class action lawsuit in California on behalf of workers who claim the bank fired or demoted them, for not bending the rules to hit those aggressive sales targets.
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The Department's Wage and Hour Division is reviewing the concerns raised by the senators to determine if it will launch an investigation into Wells Fargo's pay practices, he said. Tolstedt announced her retirement in July and had been expected to leave with as much as $125 million in salary, stock options and other compensation before the board's announcement.
"These initial actions will not preclude additional steps being taken with respect to Mr. Stumpf, Ms. Tolstedt or other executives as a outcome of the information developed in the investigation", the bank said.
The bank settled initial government inquiries about two months later, paying $US185 million in penalties without admitting or denying wrongdoing. Debit cards were issued and activated, as well as PINs created, without customers' knowledge. It also eliminated quotas for bankers, branch managers and district managers, beginning in January.
Warren and seven other senators wrote to Perez last week asking for an investigation in the wake of Wells Fargo's agreement to pay $185 million to settle investigations by Los Angeles City Attorney Mike Feuer and federal regulators into improper sales tactics.
Between 2011 and 2015, when Wells Fargo has acknowledged the scheme was going on, the bank's five highest-ranking executives accumulated $300 million in bonuses and performance awards, according to an analysis by Equilar, a research group.
House lawmakers are planning to press Mr. Stumpf on Thursday to provide more complete responses to some of the key questions that he wasn't able to address at the Senate committee.