- Three former executives in Wells Fargo's community bank group have agreed to penalties with the Office of the Comptroller of the Currency (OCC) for their roles in the bank's 2016 fake accounts scandal, the regulator announced Monday.
- Matthew Raphaelson, the group's former finance officer, faced the stiffest punishment among them. He consented to a ban from the banking industry and agreed to pay a $925,000 civil money penalty.
- "The OCC actions against former employees," a spokeswoman for the bank told American Banker in an email, "are consistent with our belief that we should hold ourselves and individuals accountable, and that significant parts of the operating model of our Community Bank were flawed at that time."
The penalties follow settlements the OCC announced in January with three former Wells Fargo executives and charges issued against five former managers at the bank in connection with the 2016 scandal, in which employees were found to have created roughly 3.5 million fake accounts to receive sales-based incentives.
In addition to Raphaelson, Kenneth Zimmerman, the community bank group's former head of deposit products, agreed to pay a $400,000 penalty. Tracy Kidd, the group's former human resources chief, agreed to pay $350,000. As part of the agreement, Zimmerman and Kidd must notify the OCC within 20 days of accepting positions in the banking industry that have any management authority pertaining to their respective areas of expertise — deposit products and human resources.
"We are committing all necessary resources to ensure that we operate with the strongest business practices and controls, maintain the highest level of integrity, and have in place the appropriate culture," the Wells Fargo spokeswoman told American Banker. "The company is different today, and we are doing what's necessary to regain the trust of all stakeholders."
Upon joining the bank nearly a year ago, CEO Charlie Scharf prioritized "advancing our required regulatory work with a different sense of urgency and resolve," he said.
The bank began 2020 with 12 public enforcement actions against it — many related to the fake accounts scandal. The OCC is far from the only regulator penalizing the San Francisco-based lender. The Federal Reserve in 2018 instituted a $1.95 trillion asset cap in response to the scandal — a penalty Bloomberg estimates has cost the bank $4 billion in profits and more than $220 billion in stock market value. Wells Fargo in February also agreed to pay $3 billion to the Department of Justice and the Securities and Exchange Commission over the 2016 scandal.
In a January settlement, the OCC banned Wells Fargo's former CEO, John Stumpf, from the banking industry and fined him $17.5 million. The regulator also levied seven-figure fines on the bank's former chief administrative and chief risk officers. Additionally, the OCC banned Carrie Tolstedt, the head of the community bank, and fined her $25 million; banned the community bank group's risk officer and fined her $5 million; and issued personal cease-and-desist orders and fines against three other managers.