Former Wells Fargo execs must answer for phony account scandal
The Office of the Comptroller of the Currency (OCC), a top US banking regulator, kicked off its civil trial on Monday of three former Wells Fargo executives over their alleged roles in a scandal involving phony accounts at the San Francisco lender.
The proceedings before an in-house OCC judge in Sioux Falls, S.D., mark a rare public confrontation between the regulator and former top bank executives it says are partly culpable for Wells Fargo’s misconduct.
The OCC alleges that Wells Fargo’s former risk officer Claudia Russ Anderson, former chief auditor David Julian and former executive audit director Paul McLinko failed to adequately perform their duties and responsibilities, contributing to Wells Fargo’s “systemic sales practices misconduct” from 2002 to 2016.
The regulator brought civil charges last year against the trio, as well as other former Wells Fargo executives, and has demanded they pay nearly $19 million combined to settle the matter. It is also seeking to bar Russ Anderson from the banking industry over allegations of outright law and regulation violations.
The long-running scandal over Wells Fargo’s pressurized sales culture that led staff to open millions of unauthorized or fraudulent customer accounts has cost the bank billions of dollars in civil and criminal penalties and has badly damaged its reputation.
“The record reflects that from at least 2013-2016 sales practice misconduct was pervasive and widespread,” Administrative Law Judge Christopher McNeil said in opening remarks detailing the allegations against each of the former executives.
Russ Anderson, Julian and McLinko are fighting the allegations. Attorneys for the trio did not respond to requests for comment, but an attorney representing Julian raised allegations of potential bias and credibility issues of government examiners in opening motions, hinting at a potential defense strategy.
A spokesperson for Wells Fargo declined to comment beyond a January 2020 statement in which CEO and president Charlie Scharf said the OCC’s actions were consistent with holding the firm and individuals accountable for “inexcusable” sales practices issues.
“This hearing represents the culmination of the OCC’s longstanding efforts to hold these individuals accountable for material failures in risk management and for consumer harm,” the OCC said in a statement Friday, forecasting the trial to last at least two weeks.