Wells Fargo CEO Is out as Bank Grapples With Sales Scandal

In early September, the bank reached an $185m settlement with USA regulators over its use of unauthorised bank accounts, and an internal investigation into the scandal is on-going.”He’s going to claim that he didn’t know how they were running the retail side of the business”, Miller said. Just a day after the call leaked, Stumpf was out.Stumpf’s retirement is surprising given that other CEOs, especially in the financial industry, have been able to weather scandals of a similar scale, said Carl Tobias, a professor at the University of Richmond School of Law.His replacement is president Tim Sloan. Recently, though, he was promoted to chief operating office, in November 2015.Carrie Tolstedt, the woman who ran the retail division when the misconduct occurred, reported to Sloan from November of past year. She was stripped of $19 million of her stock awards, and her departure was made immediate. Lead
director Stephen Sanger will serve as the board’s non-executive chairman.It is hard to estimate the total cost of the probes and litigation Wells will face over the unauthorized accounts, analysts said.Since the announcement of the settlement on Sep 8, shares of Wells Fargo, whose troubles continue to deepen with probes and lawsuits, lost over 9%.During his almost four-hour testimony before the House Financial Services Committee last month, Stumpf was called upon several times to resign by representatives.Mr. Sloan hasn’t completely escaped the scandal.Additionally, an investigation – as pushed for by Sen.For his part, Stumpf has careened between blaming employees and accepting “full responsibility for all unethical sales practices”.Wells Fargo is expected to say how much money it has set aside for legal costs it can reasonably predict when management discusses results on Friday. “There may be questions about why he was allowed to retire”.Even so, most analysts have cut profit forecasts for Wells Fargo, citing fallout from the scandal.It should be pointed out that not all consumers are angry at the bank’s employees.Since 2011, the US’ third largest bank has fired over 5,300 employees for illegally opening approximately two million accounts without their customers’ consent.On Wednesday Wells spokesman Oscar Suris said Stumpf will receive no additional severance for leaving. The new CEO will also contend with ongoing regulatory investigations and private litigation.

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