SAN FRANCISCO (CBS/AP) – Wells Fargo CEO John Stumpf is expected to resign from the company and the board, effective immediately, in the wake of a scandal over bank’s sales practices.
The board elected Tim Sloan, the Company’s president and chief operating officer, to succeed him as CEO.
Stumpf issued a statement that reads, in part:
“I am grateful for the opportunity to have led Wells Fargo. I am also very optimistic about its future, because of our talented and caring team members and the goodwill the stagecoach continues to enjoy with tens of millions of customers. While I have been deeply committed and focused on managing the Company through this period, I have decided it is best for the Company that I step aside…”
Several lawmakers, both Republican and Democrat, alleged that Wells Fargo’s sales practices may have violated federal laws, including the federal racketeering laws, which would constitute a criminal offense. Federal regulators have not said if they have referred the Wells Fargo case to the Department of Justice.
U.S. and California regulators have fined San Francisco-based Wells Fargo $185 million, saying bank employees trying to meet sales targets, opened up to 2 million fake deposit and credit card accounts without customers’ knowledge. Regulators said they issued and activated debit cards, and signed people up for online banking without permission. The abuses are said to have gone on for years, unchecked by senior management.
Few top bank executives have had their compensation clawed back in the years since the financial crisis starting in 2008. While unusual, the move by the board “was the right thing to do,” said Charles Elson, a professor and director of the Weinberg Center for Corporate Governance at the University of Delaware.
<em>(TM and © Copyright 2010 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2010 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or Redistributed. The Associated Press contributed to this report.)</em>