Ex-Head of Retail Banking at Wells Fargo & Co Settles SEC Fraud Allegations with $3 Million Fine
The U.S. Securities and Exchange Commission (SEC) has declared that the former chief of Wells Fargo & Co's retail banking section has agreed to a resolution entailing a $3 million penalty. This move comes in response to fraud accusations lodged by the SEC, who claim that she provided investors with deceptive information regarding sales strategies designed to artificially boost a significant performance measure.
Carrie Tolstedt, the individual at the heart of this case, faced accusations in 2020 related to her suspected role in propagating misleading statements about the financial performance of Wells Fargo's primary business operations. Her public depiction of the bank's sales conduct allegedly presented an inaccurately optimistic view of the bank's fiscal standing to investors.
Earlier in the year, as part of a plea deal, Tolstedt accepted to plead guilty to the obstruction of a bank examination. These charges are associated with the extensive fraudulent accounts scandal that shook the bank in 2016 and could potentially lead to imprisonment. In the settlement made known this Tuesday, Tolstedt refrained from either admitting or denying the SEC's claims.
The SEC alleges that from mid-2014 through mid-2016, Tolstedt publicly promoted and praised Wells Fargo's "cross-sell metric" as a gauge of the bank's financial success. This was despite indications that this measure was inflated by accounts and services that were superfluous, unused, or unauthorized.
In a separate case, Wells Fargo reached a $3 billion settlement in February 2020 to conclude federal civil and criminal probes related to the deceptive accounts scandal. The bank acknowledged that it placed excessive pressure on its employees to achieve unrealistic sales goals from 2002 to 2016, which drove them to create unauthorized accounts for customers. This settlement serves as a stark reminder of the bank's misdeeds and the importance of rigorous corporate governance and supervision in the banking industry.
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