OCC Fines Three Former Wells Fargo Executives $18.5 Million Over Sales Scandal

The Office of the Comptroller of the Currency Tuesday fined three former Wells Fargo executives for failing to report misconduct at the bank from 2013 to 2016, an outgrowth of charges filed by the agency in 2020.

“The decisions issued today explained that under pressure to meet unreasonable sales goals, thousands of employees at the bank engaged in widespread sales practices misconduct,” a press release noted. “These are the remaining outstanding enforcement actions among those that the OCC pursued against 11 individuals related to the bank’s systemic and widespread sales practices misconduct.”

The agency fined Claudia Russ Anderson — Wells’ former Community Bank Group Risk Officer — $10 million and banned her from the banking industry for life for what the agency called “one of the largest scandals in banking history.” Anderson engaged in reckless and unsafe banking practices from 2013 to 2016, the agency said, decisions that contributed to systemic misconduct in sales practices at the bank.

Anderson failed to challenge the bank’s unreasonable sales goals attached to employees’ incentive compensation program and neglected to establish effective controls to manage the risks associated with sales practices, the OCC said. Anderson also failed to escalate known risks, downplaying the severity of the sales practices and provided false, incomplete, and misleading information to the OCC in its 2015 examinations, the regulator said.

The bank’s former Chief Auditor David Julian — who, according to his Linkedin profile, is now retired — was fined $7 million, ordered to cease-and-desist from unsafe practices and comply with all laws and regulations. Paul Mclinko, the banks’ former executive audit director, was fined $1.5 million and also received a cease-and-desist order compelling him to cease unsafe practices and comply with regulatory obligations in any banking activity going forward.

The two former senior auditors at Wells Fargo were found to have committed serious misconduct related to the bank’s sales practices and from 2013 to 2016, having failed to plan and manage audits effectively to detect and address fraudulent sales practices, including the opening of unauthorized accounts and falsifying customer information. They also failed to escalate the issue of sales practices misconduct to higher authorities, disregarding the risks to the bank and its customers, according to the OCC.

A Wells Fargo spokeperson declined to comment for the story, but pointed to the bank’s press release issued in 2020 when the OCC opened the action against the executives.

The OCC brought charges against Wells executives in 2020, and in 2023 resolved charges filed against eight other former senior bank executives, resulting in civil money penalties totaling $43,175,000. Among these, Carrie Tolstedt — the former head of retail banking at Wells Fargo — paid a $17 million fine and had $67 million in compensation clawed back by the bank.

The OCC said the bank’s business model used unreasonable sales goals and sales pressure to make higher profits than would have been possible without such practices. The bank also issued a high number of unauthorized products and services to customers to inflate the number of sales per household and raise the company’s stock price.

“The Bank tolerated pervasive sales practices misconduct as an acceptable side effect of the [the Bank’s retail branch network]’s profitable sales model, and declined to implement effective controls to catch systemic misconduct,” an OCC release said. “Instead, to avoid upsetting a financially profitable business model, senior executives, including Respondents, turned a blind eye to illegal and improper conduct across the entire [retail branch network].”