Wells Fargo & Company has fired four executives based on findings of an ongoing investigation by the company’s board of directors into the company’s retail banking sales practices and other related matters.
The employees were all current or former senior managers in the company’s Community Banking Division. The board voted unanimously to dismiss them for cause, and require they forfeit all of their unvested equity awards and vested outstanding options and do not receive bonuses for 2016.
The managers include: former Community Bank Chief Risk Officer Claudia Russ Anderson; Arizona Lead Regional President Pamela Conboy; former Los Angeles Regional President (now head of Consumer Credit Solutions) Shelley Freeman; and the head of Community Bank Strategy and Initiatives Matthew Raphaelson.
Anderson took a six-month, unpaid leave of absence right before former Wells Fargo CEO John Stumpf testified in front of the Senate regarding allegations that employees created unauthorized customer accounts, and engaged in other sales practices flagged by the Consumer Financial Protection Bureau and other regulators as being unfair or abusive.
Conboy was among those accused of involvement in unethical sales practices in a letter from an employee to Wells executives.
The company said via a press release that it expects to complete its investigation by its April 2017 annual meeting of stockholders, at which time all findings and additional actions will be made public.
Similar to the four executives let go as a result of the board’s investigation, Stumpf and former head of Community Banking Carrie Tolstedt also were forced to forfeit unvested stock rewards, as well as bonus pay. Stumpf resigned after making appearances before the House and Senate about the enforcement actions.
Stumpf was replaced by former Wells COO Tim Sloan, who issued an in-person apology in Charlotte, N.C., that was broadcast online to the entire company shortly after taking over as CEO.
During the apology, Sloan outlined what challenges he believed the company faced and what actions would be taken. He boiled down the specific issues with the company’s sales practices into five points:
- First, product sales goals sometimes resulted in behaviors and practices that did not serve the best interests of customers or employees, and the company was slow to recognize the adverse effects;
- Second, despite ongoing efforts to combat unacceptable practices and bad behaviors, they persisted either because the company minimized these issues or failed to recognize them as bigger than originally thought;
- Third, the company failed to acknowledge the role leadership played in creating and enabling bad practices, then blamed employees, something Sloan said “still hurts” and that he is committed to rectifying;
- Fourth, the failure to heed warning signs sooner; and
- Fifth, failure to invite inspection more frequently and welcome credible operational challenges.
“My pledge to you is that we will keep these lessons, and others we discover, part of our ongoing conversation, so we may learn from our mistakes,” Sloan said. “In the meantime, we won’t wait for all the answers before we take action. We need to trust ourselves and what’s good about our company. This has already involved a wide array of actions to address sales practices issues. Expect more to come.”