Wells Fargo Fake-Accounts Scandal
"Wells Fargo board gets black eye in shareholder vote,” was the glaring headline from Reuters following the financial giant’s annual meeting earlier this year.
The contentious meeting included an investor shouting at directors about whether they were complicit in the fraud or just incompetent, and a largely anemic shareholder vote of support for the 15-member board.
“Wells Fargo stockholders today have sent the entire board a clear message of dissatisfaction,” said Stephen Sanger, Wells Fargo’s board chairman in a statement after the vote. “Let me assure you that the board has heard that message, and we recognize there is still a great deal of work to do to rebuild the trust of stockholders, customers and employees.”
The Wells Fargo scandal, which including thousands of employees creating fake customer bank accounts, led to a $142 million government settlement, congressional hearings and the ouster of the firm’s CEO and chairman, John Stumpf.
A report by Wells Fargo meant to explain the fiasco found: “The root cause of sales practice failures was the distortion of the community bank’s sales culture and performance management system, which, when combined with aggressive sales management, created pressure on employees to sell unwanted or unneeded products to customers and, in some cases, to open unauthorized accounts.”
As for bank’s directors, the report stated that “the board was regularly engaged on the issue; however, management reports did not accurately c...