A former Wells Fargo executive agreed to pay nearly $5 million to settle charges levied by the Securities and Exchange Commission (SEC) related to the bank’s fake account scandal.
Carrie Tolstedt, the former head of Wells Fargo’s community bank, agreed to pay a $3 million civil penalty, disgorgement of $1,459,076, and prejudgment interest of $447,874, the SEC said Tuesday in a press release.
Without admitting or denying the agency’s allegations, Tolstedt agreed to a cease-and-desist order and a permanent officer-and-director bar. The settlement, filed in U.S. District Court for the Northern Division of California, is still subject to court approval.
The details: From 2014-16, Tolstedt endorsed a “cross-sell metric” as a means of measuring Wells Fargo’s financial success, despite knowing it was inflated by accounts and services that were “unused, unneeded, or unauthorized,” the SEC said. The agency further alleged Tolstedt knew or was “reckless in not knowing” about “rampant sales misconduct” at the community bank that led bankers to push products customers did not need or want, including opening unauthorized accounts, per the SEC’s complaint.
The SEC said Tolstedt also made misleading public statements to investors and signed misleading subcertifications for bank disclosures regarding the cross-sell metric.
Tolstedt agreed to pay a $17 million fine announced by the Office of the Comptroller of the Currency (OCC) in March for her alleged participation in “systemic sales practices misconduct” at Wells Fargo, including imposing unreasonable sales goals and pressure to meet those goals.
In November 2020, former Wells Fargo Chief Executive John Stumpf agreed to pay $2.5 million to settle SEC charges related to his alleged role in misleading investors regarding the fake account scandal. The OCC fined Stumpf $17.5 million in January 2020 and banned him from the banking industry.
Wells Fargo paid civil and criminal penalties worth $3 billion in February 2020 to resolve charges laid by the SEC and Department of Justice related to the scandal.