UPDATE: Jan. 23, 2020: Former Wells Fargo CEO John Stumpf will pay a settlement of $17.5 million for his connection to the bank’s 2016 fake accounts scandal, said the Office of the Comptroller of the Currency, which also barred Stumpf from working in the banking industry. See Banking Dive's latest coverage.
The Office of the Comptroller of the Currency (OCC) is preparing civil charges against as many as 10 former Wells Fargo managers, stemming from their ties to the bank’s 2016 fake accounts scandal, sources told Bloomberg.
Carrie Tolstedt, who ran Wells Fargo’s community banking division; former Chief Administrative Officer Hope Hardison; and onetime chief auditor David Julian could be among those facing charges, according to sources.
The OCC, the bank’s primary regulator, may reach settlements with some of the people charged. The agency did not respond to Banking Dive’s request for comment.
Wells Fargo has faced penalties from the OCC in the past, but a charge against former employees would mean the regulator also wants to hold individuals accountable for the scandal.
The San Francisco-based bank has been under scrutiny from lawmakers and regulators since 2016, when Wells Fargo employees were found to have created roughly 3.5 million fake accounts to receive sales-based incentives.
The OCC levied a $500 million penalty against the nation’s fourth-largest bank in 2018 and ordered the bank to make restitution to customers. It also ordered Wells Fargo to “develop and implement an effective enterprise-wide compliance risk management program.”
American Banker reported this month that Justice Department prosecutors in California and North Carolina, with assistance from both the OCC and the Securities and Exchange Commission, conducted a federal criminal investigation of former employees.
Sources told the publication federal prosecutors could charge former members of Wells Fargo's upper management as early as this month.
The reports come as new Wells Fargo CEO Charlie Scharf attempts to turn the bank around following the scandal that played a role in the departure of two CEOs.
Scharf said last week that he is prioritizing the resolution of Wells Fargo’s regulatory issues.
“During my first three months at Wells Fargo, my primary focus has been on advancing our required regulatory work with a different sense of urgency and resolve, while beginning to develop a path to improve our financial results,” Scharf said in a press release.
During a Q4 earnings call with analysts last week, Scharf said the bank has 12 public enforcement actions that require a significant commitment of resources.
The bank is also operating under a $1.95 trillion asset cap since the Federal Reserve restricted its growth in 2018.