Wells Fargo suspends executives as investigations roll on
Wells Fargo employees altered documents about business clients
Height Capital Markets senior banking analyst Ed Groshans discusses whether investors should still keep Wells Fargo in their portfolios, despite the recent report that the bank’s employees altered documents about business clients.
Scandals and executive turmoil continue to dominate the country’s third-largest bank.
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Wells Fargo announced this week that it has put two key executives on leave as investigations roll on into the bank’s retail sales practices.
Hope Hardison, the bank’s chief administrative officer, and David Julian, its chief auditor, were both placed on a leave of absence and were removed from the bank’s operating committee, the company said Wednesday.
While the San Francisco-based bank wouldn’t elaborate on the reason for the abrupt moves, it continues to cope with the 2016 fallout of millions of fake accounts created by its bankers over the years to meet sales targets.
Earlier this week, the bank settled with the New York attorney general’s office for $65 million over allegations it misled investors about its sales practices.
However, that number is small in comparison to other penalties that have hit the bank over the last year. In August, the U.S. Attorney’s office in California fined the bank $2.09 billion for allegedly mispresenting loan quality for mortgages it made and sold leading up to the 2008 financial crisis.
Then in April, the Consumer Financial Protection Bureau hit the banks with a record fine of $1 billion for similar allegations over its mortgage and auto loan businesses.
Wells Fargo CEO Tim Sloan said the two executives being placed on a leave of absence reflects the company’s commitment to make things right for its customers. Since 2016 seven of the 10 members of Wells Fargo’s operating committee have left the company.
Sources told The Wall Street Journal that both Hardison and Julian failed to oversee problems at the bank during its turmoil, which prompted the leaves of absence.
Still, the bank’s troubles are far from over. The lender is still facing several inquiries into its customer sales practices by the Department of Justice, the Securities and Exchange Commission and the Department of Labor, according to Wells Fargo’s most recent regulatory disclosure.
What’s more, the bank is also facing several class-action lawsuits by disgruntled customers.
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