Ex-Wells Fargo Exec to Pay $5M to SEC for Misleading Investors
According to Wells Fargo, the cross-sell metric was supposed to represent the average number of products sold to households that had “the potential for revenue generation and long-term viability,” the complaint states.
Tolstedt, who served as the senior executive vice president of Community Banking for Wells Fargo, “publicly discussed the cross-sell strategy, and the reported metric, as an important means for investors to distinguish Wells Fargo from its banking competitors,” according to the complaint.
Contrary to these public statements, the complaint continues, “Tolstedt and Wells Fargo’s Community Bank—its largest operating segment—implemented a volume-based sales model in which employees sold volumes of products to existing customers, often with little regard to actual customer need or expected use. For several years, until mid-2016, Wells Fargo opened millions of accounts or sold products that were unauthorized or fraudulent, and others that were unneeded and unwanted by retail banking customers. The unused accounts and products were included in the Community Bank’s cross-sell metric, sometimes for years.”
Tolstedt “misled investors and the public as to the value of Wells Fargo’s securities through false and misleading statements and by repeatedly providing misleading subcertifications as to the accuracy of the Company’s required quarterly and annual reports to shareholders,” the complaint states.
Monique Winkler, regional director of the SEC’s San Francisco Regional Office, said in a statement Tuesday that “companies do not act on their own. Where the facts warrant it, we will hold senior executives accountable for conduct that violates the securities laws.”
Without admitting or denying the SEC’s allegations, Tolstedt, agreed to a final judgment permanently enjoining her from violating, or aiding and abetting violations of, the antifraud and other provisions of the federal securities laws and imposing a permanent officer-and-director bar.
