US regulator fines ex-Wells Fargo CEO $17.5 mn over fake accounts

New York (AFP) - US authorities on Thursday fined former Wells Fargo chief executive John Stumpf $17.5 million over the bank's fake accounts scandal, an unusually punitive action against a former corporate leader.

A US banking regulator settled with Stumpf and two other former executives, while announcing charges against five other former officials whose failure to perform their duties allegedly "contributed to the bank's systemic problems," the agency said.

The scandal dates back years, when Wells Fargo employees from 2002 to 2016, opened millions of deposit and credit card accounts without the approval or knowledge of their customers.

The penalties imposed on Stumpf by the Office of Comptroller of the Currency include a lifetime ban on working in the banking industry, and are far more severe than anything CEOs faced after the 2008 financial crisis and may be unprecedented, legal experts said.

The crackdown sends "a general message to the banking industry that senior people need to be vigilant against compliance breakdowns and if they don't, they may need to be writing checks," said Geoffrey Parsons Miller, a professor at New York University School of Law and an expert in compliance.

Wells Fargo executives set up a corrupt system based around unrealistic goals in the community bank, that linked employee compensation to the opening up new accounts, causing "hundreds of thousands of employees to engage in numerous types of sales practices misconduct," the OCC said in a complaint.

"Community bank management intimidated and badgered employees to meet unattainable sales goals year after year, including by monitoring employees daily or hourly and reporting their sales performance to their managers" and "subjecting employees to a hazing-like abuse," the complaint said.

Employees "could engage in sales practices misconduct -- much of which was illegal -- to meet their goals, or they could struggle to meet their goals and face adverse consequences, including losing their jobs." Read More

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