Banking

Judge’s report hammers 3 ex-Wells Fargo executives

Three previous top-level Wells Fargo executives might be required to pay countless dollars in charges after a judge designated them substantial fault for the bank’s fake-accounts scandal.

In a report revealed on Wednesday, Administrative Law Judge Christopher McNeil suggested stiff charges for previous Chief Auditor David Julian, previous Community Bank Group Risk Officer Claudia Russ Anderson and previous Executive Audit Director Paul McLinko.

The 3 executives will be bought to pay a combined $18.5 million in civil cash charges if the judge’s suggestions are embraced by acting Comptroller of the Currency Michael Hsu. In addition, both Julian and Russ Anderson would be prohibited from operating in the banking market.

The suggestions are mainly in line with the charges that were looked for by the Office of the Comptroller of the Currency throughout a months-long civil hearing that ended in January. The company declared that the 3 previous executives did not perform their tasks and obligations effectively, which their failures added to systemic issues at the bank.

A representative for the OCC, which is the main regulator of Wells Fargo’s bank subsidiary, decreased to discuss the suggestions. 

Lawyers for the 3 previous Wells executives showed that they prepare to continue combating the OCC. The accuseds will have the chance to ask a federal appeals court to evaluate whatever charges get evaluated.

“We are very disappointed by the decision but not surprised by it,” Matthew Martens, a lawyer for Julian, stated Wednesday in a declaration. “As we have said from the outset, Mr. Julian is being scapegoated, and he has yet to receive a fair hearing on the merits. We plan to challenge what we view as a deeply flawed decision and are confident of our prospects on appeal.”

Timothy Crudo, a legal representative for McLinko, stated in a different declaration: “Mr. McLinko did not engage in any misconduct.  Despite the unfairness that has pervaded this proceeding, we are confident that ultimately he will prevail.”

Brett Kelley, a legal representative for Russ Anderson, stated that his customer highly disagrees with the judge’s suggested findings. “Many irregularities and errors permeated the administrative proceedings that rendered the hearing fundamentally unfair,” Kelley stated in an e-mail. “In the end, we expect Ms. Russ Anderson to be vindicated.”

The hearing, which started in September 2021, included numerous hours of statement about the fake-accounts scandal. The statement concentrated on the duration in between October 2013, when the Los Angeles Times initially reported on Wells Fargo shooting staff members who were implicated of unfaithful on their sales objectives, and late 2016, when regulators initially punished the bank.

Witnesses at the hearing consisted of Pat Callahan, a previous chief administrative officer at Wells Fargo; Tanya Smith, who was as soon as the OCC’s inspector in charge of Wells Fargo; and the 3 accuseds.

The OCC has actually likewise looked for to gather $25 million in charges from Carrie Tolstedt, the one-time head of Wells Fargo’s retail banking system, called the Community Bank. But Tolstedt, who has actually at the same time been dealing with civil charges by the Securities and Exchange Commission, was not consisted of in this hearing.

Numerous other previous magnates at Wells Fargo settled with the OCC instead of contesting its accusations. Those people consist of previous CEO John Stumpf, who accepted a $17.5 million charge and a restriction from the banking market; previous General Counsel James Strother, who accepted pay $3.5 million; and previous Human Resources Director Hope Hardison, who opted for $2.25 million.

For its own part, Wells Fargo accepted pay $3 billion in 2020 to deal with a criminal probe by the Department of Justice and the Securities and Exchange Commission. The San Francisco bank likewise acknowledged that staff members broke the law by devoting scams and identity theft, and by falsifying bank records.

Wells Fargo’s present president, Charlie Scharf, has actually decried the conduct of previous executives who entered into the OCC’s crosshairs, explaining it as irregular with the worths on which the business was constructed.

When the OCC brought civil charges versus private executives in 2020, it initially looked for a $5 million charge from Claudia Russ Anderson, $2 million from David Julian and $500,000 from Paul McLinko.

But the list below year, the OCC modified those quantities up. Prior to the hearing, the company stated it was looking for a $10 million charge from Russ Anderson, $7 million from Julian and $1.5 million from McLinko.

In the report revealed on Wednesday, the administrative law judge suggested financial charges of those very same quantities. And on one specific matter, McNeil exceeded what the OCC was looking for. He suggested that Julian be prohibited from banking, mentioning what he referred to as inculpatory proof that emerged after the OCC brought charges.

The 78-page file launched Wednesday is a summary of 3 reports including suggestions, which were sealed by the administrative law judge till Dec. 30.

Crudo, the legal representative for McLinko, revealed dissatisfaction over the general public release of the summary file, stating that the privacy of the underlying files avoids him from discussing either the sealed files or the summary.

Gabriel

A news media journalist always on the go, I've been published in major publications including VICE, The Atlantic, and TIME.

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