^ Attorney General Shapiro Announces $575 Million 50-State Settlement with Wells Fargo Bank for Opening Unauthorized Accounts and Charging Consumers for Unnecessary Auto Insurance, Mortgage Fees-December 28, 2018 The Wells Fargo board of directors gets whitewashed by the investigation it commissioned. Powered and implemented by Interactive Data Managed Solutions. Both the chair and vice chair positions recently received pay increases. The Board's independent investigation falls short in many ways. While shareholders can give the board credit for its recent response, Glass Lewis said they "should not avoid placing blame on the board for its failings.". FORTUNE may receive compensation for some links to products and services on this website. Many Wells Fargo directors served on the board during the length of the fake account problem. ISS said media reports of about the alleged firing of whistleblowers who called the ethics line raise "grave concerns" about the bank's system of identifying risk -- a system the board is supposed to oversee. The firm slammed Wells Fargo's board for having "failed" over several years to provide the tough oversight that should have "mitigated the harmful impact of the unsound retail banking sales practices.". Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. The only directors ISS endorsed for re-election are new to the board: CEO Sloan, who joined the board in October; and two others who were named as independent directors in February. Related: Feds knew of 700 Wells Fargo whistleblower cases. Our Standards: The Thomson Reuters Trust Principles. All the directors of the special committee are independent in that they do not work for the company in an operational sense. “We found a breakdown in a small number of our team members,” a Wells Fargo spokesman stated. A verdict on the board's handling of the scandal could be delivered on Tuesday when Wells Fargo (WFC) shareholders vote on whether to re-elect directors at the bank's annual meeting in Florida. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. A spokesman for Wells Fargo declined to comment and Sard Verbinnen, which represents the board, did not immediately respond to requests for comment. ETF and Mutual Fund data provided by Morningstar, Inc. Dow Jones Terms & Conditions: http://www.djindexes.com/mdsidx/html/tandc/indexestandcs.html. CA Notice at Collection and Privacy Notice, http://www.djindexes.com/mdsidx/html/tandc/indexestandcs.html. Morningstar: © 2019 Morningstar, Inc. All Rights Reserved. The Labor Department recently ordered Wells Fargo to rehire an employee who was terminated after calling the ethics line. A number of large pension funds are heeding that advice, including the New York City Comptroller and the California State Teachers' Retirement System (CalSTRS). Wells Fargo has been criticized for its handling of whistleblowers who tried to stop the scandal. "This scandal was the result of a serious oversight failure by Wells Fargo's board, and the directors responsible need to be held accountable," NYC Comptroller Scott Stringer said in a statement. Sanger, a former CEO of General Mills Inc GIS.N, has served on Wells Fargo's board since 2003, while Duke, a former member of the Federal Reserve Board of Governors, has been a director since 2015. Several prominent shareholder watchdog groups are recommending Wells Fargo investors reject many of the bank's board members over their handling of the scandal. Wells Fargo's board of directors "was never informed of 700 whistleblower complaints," a spokesman for the board told CNNMoney. Sanger, a former CEO of General Mills Inc. , has served on Wells Fargo's board since 2003, while Duke, a former member of the Federal Reserve Board of Governors, has been a director since 2015. 1. Rounding out the special committee’s leadership, the person said, are Enrique Hernandez, chair of the board of directors’ risk committee, and Donald James, a director who sits on the board’s finance and risk committees. Use of this site constitutes acceptance of our Terms of Use and Privacy Policy | CA Notice at Collection and Privacy Notice | Do Not Sell My Personal Information | Ad Choices  Quotes delayed at least 15 minutes. For instance, Stephen Sanger, the former General Mills (GIS) CEO who became Wells Fargo's chairman last fall, has been a director since 2003. The board report found that Wells Fargo's directors were not alerted by management until 2014 that the sales practice issues were a "noteworthy" risk. According to a Sept. 8 regulatory settlement, problematic sales practices at Wells Fargo go back to at least 2011. Market data provided by Interactive Data. Based on its findings, Wells Fargo’s independent board took steps to clawback an additional $75million from Stumpf and head of community banking Tolstedt for sales abuses resulting from the sales programme. But the report also concluded that Wells Fargo's directors should have pushed immediately for "more detailed and concrete plans" to fix the problem and have been more aggressive about holding Tolstedt accountable. But could Wells Fargo's board have done more sooner to prevent the scandal? That structure is blamed for giving too much deference to department heads, including then-community banking chief Carrie Tolstedt. The chair used to be paid $60,000 plus separate fees for chairing committees. © 2020 Fortune Media IP Limited. The chairman now receives $250,000 annually and the vice chair receives $100,000. Wells Fargo CEO: We should have addressed concerns in 2004, First published April 24, 2017: 10:23 AM ET, firestorm over the termination of 5,300 workers, ordered Wells Fargo to rehire an employee, These are your 3 financial advisors near you, This site finds and compares 3 financial advisors in your area, Check this off your list before retirement: talk to an advisor, Answer these questions to find the right financial advisor for you, An Insane Card Offering 0% Interest Until Nearly 2020, Transferring Your Balance to a 14-Month 0% APR is Ingenious, The Top 7 Balance Transfer Credit Cards On The Market Today, Get $300 Back With This Outrageous New Credit Card. Reporting by Dan Freed in New York; Editing by Tom Brown. Backlash against Jones Day, the law firm aiding Trump’s election challenge, begins to escalate, Will another $1,200 stimulus check ever come? A host of investigations and lawsuits are still pending. Disclaimer. Almost half-a-dozen Wells Fargo workers told CNNMoney last fall they were fired after calling the confidential hotline. All Rights Reserved. The decentralization problem helps explain how a damning 2004 internal Wells Fargo report titled "Gaming" eerily foretold the fake account scandal, but fell on deaf ears. Factset: FactSet Research Systems Inc.2019. CNN Sans™ & © 2016 Cable News Network. A Warner Media Company. A… The board's own independent investigation suggests the answer is yes. The board hired new CEO Tim Sloan, launched an exhaustive investigation and clawed back $180 million in compensation, which is said to be a record for a bank. Wells Fargo's board urged shareholders to "disregard" the ISS report, saying the "extreme and unprecedented" recommendations fail to consider the actions since the scandal. Now that Pfizer is the vaccine front-runner, should you buy the stock? © 2020 Cable News Network. Independent directors in April 2017 issued a scathing report around the Wells Fargo scandal. S&P Index data is the property of Chicago Mercantile Exchange Inc. and its licensors. “Our team members do have goals. All rights reserved. The source asked not to be identified as the full make-up of the committee has not been made public. Those failings by the board "arguably, contributed to the over 5,300 job losses, $300 million direct costs, and untold reputational harm at the bank," ISS concluded. Here’s what we know, Why the counties Joe Biden won represent 70% of U.S. GDP. According to the Los Angeles Times, approximately 30 employees were fired for opening new accounts and issuing debit or credit cards without customer knowledge, in some cases by forging signatures. Still, the OCC findings raise questions about whether Wells Fargo's board of directors, which is charged with helping to safeguard the bank's "integrity and reputation," did enough to monitor a sales culture that had run amok. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. The bank fired 5,300 branch employees over the matter, which also led to the resignation of former Chief Executive Officer John Stumpf. All quotes delayed a minimum of 15 minutes. Business. There's no doubt that Wells Fargo's board of directors sprang into action when the scandal broke in September and the ensuing firestorm over the termination of 5,300 workers for creating some two million fake accounts. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2019 and/or its affiliates. Offers may be subject to change without notice. That's according to a recent investigation by the nation's federal bank regulator. Most stock quote data provided by BATS. While that 110-page board report pinned most of the blame on senior management, it also found that Wells Fargo directors should have moved faster to fix the flawed "decentralized structure" that allowed for the scandal to fester largely unchecked at the sprawling bank. All rights reserved. That's why ISS recommends shareholders vote against almost all Wells Fargo directors. Law firm Shearman & Sterling and the board’s human resources committee will also work on the investigation, according to an announcement by Wells Fargo’s board on Sept. 27. All rights reserved. The same Office of the Comptroller of the Currency report also revealed that as early as 2010 there were some "700 cases of whistleblower complaints" about Wells Fargo's sales tactics. For the latest business news and markets data, please visit CNN Related: Wells Fargo ups customer settlement to $142 million. It may also help explain how "the board only learned" about the firing of 5,300 employees when the rest of the world did: through the September 2016 settlement with authorities. Wells Fargo saw its shares battered in September and October following a $190 million settlement with two regulators and the City Attorney of Los Angeles over the creation of as many as 2 million accounts set up without customers’ authorization. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. In 2013, rumors circulated that Wells Fargo employees in Southern California were engaging in aggressive tactics to meet their daily cross-selling targets. Chairman Stephen Sanger and Vice Chair Elizabeth Duke have been named to a four-member committee that will lead an internal investigation into the bank's recent sales scandal, a person familiar with the matter said on Thursday. In September 2013, on the fifth anniversary of the peak of the 2008 financial crisis,The Economist decided that one of the interesting […] Glass Lewis, another shareholder watchdog group, advised Wells Fargo investors to re-elect Sanger but reject six other directors. Wells Fargo directors sitting on the audit and examination committee received materials "going back to at least 2002" that referenced "sales conduct or 'gaming' issues," the board report found. Two new reports concerning the Wells Fargo scandal suggest that the bank’s senior management, its board of directors, and the regulators all knew about the bank’s toxic practices, yet for years did nothing to stop them.

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