LOS ANGELES — In a long-anticipated report released Monday, Wells Fargo & Co. pinned the blame for its unauthorized-accounts scandal on weak corporate oversight, an unwatchful former CEO and the executive who led the bank’s community banking division.
The San Francisco bank also said it would take back more than $47 million in pay from the former community banking executive, Carrie Tolstedt, and $28 million from former Chief Executive John Stumpf.
Those new clawbacks are in addition to the bank’s move last year to cancel about $41 million in stock awards for Stumpf and $19 million for Tolstedt.
The report was commissioned by the bank’s board last year and prepared by the Shearman & Sterling law firm. It alleged that Tolstedt not only failed to see the potential harm caused by unauthorized account openings and other unethical sales practices — but that she tried to keep information about those practices away from the board and others at the bank. That included the number of workers fired for unethical conduct.
“Tolstedt effectively challenged and resisted scrutiny,” the report said, describing Tolstedt and members of her “inner circle” as “insular and defensive.”
Tolstedt, on the advice of her lawyer, declined to be interviewed during Shearman & Sterling’s investigation, according to the report.
In an emailed statement Monday, Enu Mainigi, an attorney for Tolstedt, said, “We strongly disagree with the report and its attempt to lay blame with Ms. Tolstedt. A full and fair examination of the facts will produce a different conclusion.”
Stumpf, meanwhile, was overly deferential to Tolstedt, the report found, and to the bank’s longstanding focus on cross-selling, which required employees to sell multiple services to individual customers. As a result, it said, he was “too late and too slow” to make changes.
The report paints the bank’s board, meanwhile, as being out of the loop on the scope of the sales problems. Asked Monday if he should resign, Wells Fargo Chairman Stephen Sanger, who has been on the bank’s board since 2003, defended the board’s actions, saying it has acted properly since the scandal came to light.
“As we got information, we acted appropriately,” he said.
Echoing the Shearman & Sterling report, Sanger said the board was not made aware of the scope of the problem — millions of potentially unauthorized accounts, and 5,300 workers fired for bad practices — until the bank reached a $185 million settlement with regulators last year.
The internal bank investigation was released just days after an influential shareholder advisory firm said that board members failed to properly oversee the bank and could have done more to prevent “unsound retail banking sales practices.”