A former Wells Fargo executive agreed to pay a $3 million penalty to settle Securities and Exchange Commission charges that she misled investors.
From 2014 to 2016, Carrie Tolstedt publicly endorsed a key Wells Fargo metric that measured the bank’s financial success, according to the SEC. But the metric was inflated by accounts and services that were unused, unneeded or unauthorized, the SEC said in a news release this week.
Tolstedt, the longtime head of Wells Fargo’s retail banking division, knew the so-called cross-sell metric wasn’t accurately tracking accounts or products that customers needed or used because she was aware of misconduct at Wells Fargo’s Community Bank, according to the SEC. Bankers were pushing products on customers they did not need or want, including the unauthorized opening of accounts.
Tolstedt, who retired from Wells Fargo in 2016, made misleading public statements to investors at conferences, according to the SEC. She also signed misleading certifications about the accuracy of the bank’s public disclosures when she either knew or was “reckless in not knowing” the disclosures on the cross-sell metric were false or misleading, the SEC said.
The former executive did not admit or deny the SEC’s allegations through the settlement.
The SEC will distribute the $3 million settlement plus $2.5 million from a settlement with former Wells Fargo CEO and chairman John Stumpf to harmed investors. That money is in addition to $500 million previously paid by Wells Fargo. Tolstedt also agreed to pay other remedies totaling close to $2 million, according to the release.
“Companies do not act on their own,” said Regional Director Monique Winkler of SEC’s San Francisco office in a statement this week. “Where the facts warrant it, we will hold senior executives accountable for conduct that violates the securities laws.”
Wells Fargo, based in San Francisco, maintains a massive financial and employment presence across the Charlotte area, with some 27,000 employees. It came to North Carolina in 2008 with the purchase of Wachovia.
More on former Wells Fargo executive
Tolstedt, 63, also is facing up to 16 months in prison plus a $100,000 fine and three years of supervised release, The Charlotte Observer reported in March.
In an agreement announced in March in California federal court, Tolstedt agreed to plead guilty to obstructing a government examination of the bank’s misconduct, the Observer reported.
In a separate civil settlement also announced in March, Tolstedt has also been banned from working in the banking industry and must pay a $17 million penalty.
Other Wells Fargo settlements and scandals
Tolstedt’s settlement is the latest consequence of a Wells Fargo sales scandal.
Over more than a decade, hundreds of thousands of Wells Fargo employees took part in sham sales practices, opening millions of fake accounts in customers’ names to meet unreasonably high sales goals, the Observer reported in 2020.
The bank agreed in 2020 to pay a $3 billion fine to federal prosecutors and the SEC for the practices.
In May, Wells Fargo was settling a class-action lawsuit from shareholders for $1 billion over claims the bank misled them about how it was complying with regulators in the aftermath of its fake sales scandal.
This story was originally published June 1, 2023, 11:53 AM.
