Dive Brief:
- Carrie Tolstedt, who was Wells Fargo’s retail-banking chief at the time of its 2016 fake-accounts scandal, has agreed to pay nearly $5 million to settle allegations that she misled investors with regard to a “cross-sell metric” the bank used as a measure of success, the Securities and Exchange Commission announced Tuesday.
- The penalty comes more than two months after the Office of the Comptroller of the Currency fined Tolstedt $17 million and banned her from the banking industry. Tolstedt neither admitted nor denied the SEC’s allegations. The settlement is subject to court approval.
- “Companies do not act on their own,” Monique C. Winkler, director of the SEC’s San Francisco office, said in a statement Tuesday. “Where the facts warrant it, we will hold senior executives accountable for conduct that violates the securities laws.”
Dive Insight:
Tolstedt, between 2014 and 2016, publicly endorsed Wells Fargo’s “cross-sell metric” as a measure of success, including at investor conferences, even though figures were distorted by unauthorized and unused accounts, the SEC alleged in its complaint, filed in the U.S. District Court for the Northern District of California.
Further, Tolstedt knew the metric was inaccurate, the SEC said, because she was aware that bankers — trying to meet unrealistic sales goals — had been selling products that customers did not need or want and, in some cases, opening accounts without their knowledge. She also signed subcertifications as to the accuracy of Wells Fargo’s public disclosures during that time, the SEC said.
Tolstedt’s lawyer, Enu Mainigi, didn’t immediately respond to requests for comment from Bloomberg on Tuesday. A Wells Fargo representative declined to comment to the wire service.
Tolstedt faces up to 16 months in prison after pleading guilty in March to one count of obstructing a bank examination. Her sentencing is set for September.
The penalty breaks down to a $3 million fine, plus disgorgement of $1,459,076 plus prejudgment interest of $447,874, according to the SEC.
The agency said it will distribute the money — along with $500 million Wells Fargo paid as part of a 2020 SEC settlement, and a $2.5 million penalty it collected from the bank’s former CEO, John Stumpf — to harmed investors.
