Ex-Wells Fargo execs square off with U.S. regulator in trial over phony account scandal
WASHINGTON, Sept 13 (Reuters) – The trial of three former Wells Fargo & Co workers over their alleged roles in a scandal involving phony accounts kicked off on Monday, a uncommon public confrontation between a high U.S. banking regulator and former high-level financial institution executives.
The Workplace of the Comptroller of the Forex (OCC) is squaring off towards executives it says are partly culpable for the San Francisco lender’s misconduct earlier than an in-house OCC decide in Sioux Falls, South Dakota, in a listening to anticipated to final no less than two weeks.
The OCC alleges that Wells Fargo’s former threat officer Claudia Russ Anderson, former chief auditor David Julian and former government audit director Paul McLinko did not adequately carry out their duties and duties, contributing to Wells Fargo’s “systemic gross sales practices misconduct” from 2002 to 2016.
The regulator civil expenses final yr towards the trio, in addition to different former Wells Fargo executives, and has demanded they pay almost $19 million mixed to settle the matter. The OCC can be searching for to bar Russ Anderson from the banking business over allegations of outright regulation and regulation violations.
The proceedings mark a big milestone for a regulator that has been criticized prior to now for being too mushy on each banks and business executives.
The long-running scandal over Wells Fargo’s pressurized gross sales tradition that led workers to open tens of millions of unauthorized or fraudulent buyer accounts has value the financial institution billions of {dollars} in civil and legal penalties and has badly broken its fame.
Wells Fargo’s “incentive gross sales program was applied with out risk-management controls, with out proactive monitoring and it primarily incented the financial institution workers to open fraudulent accounts, to supply deceptive info to clients, leading to important hurt to the shoppers and to the fame of the financial institution,” stated Greg Coleman, OCC’s senior deputy comptroller for giant financial institution supervision and the primary witness to testify on the listening to.
Russ Anderson because the group financial institution division’s chief threat officer and McLinko and Julian as audit executives represented key strains of protection towards misconduct, the OCC official stated.
Attorneys for the trio didn’t reply to requests for remark however an legal professional representing Julian raised potential problems with bias and credibility of presidency examiners within the opening hours of the listening to, hinting at a possible protection technique.
A spokesperson for Wells Fargo declined to remark past a January 2020 assertion wherein CEO and President Charlie Scharf stated the OCC’s actions have been in keeping with holding the agency and people accountable for “inexcusable” gross sales practices points.
Reporting by Jody Godoy and Chris Prentice; Modifying by Michelle Worth, Peter Cooney and Mark Porter
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