An investigation by Wells Fargo & Co's board laid blame for the company's unauthorized accounts scandal on a high-pressure sales culture and a retail executive obsessed with stamping out negative views about her division.
The report, carried out by board Chairman Stephen Sanger and three other independent directors and released to media on Monday, said former retail division head Carrie Tolstedt ignored the systemic nature of abusive sales practices and accused her of obstructing the board's efforts to get to the bottom of an issue that festered for years.
Sanger, a board member since 2003, faces pressure to root out the problems amid calls by advisory group Institutional Shareholder Services for investors to oust him and other directors in place when the scandal broke. Advisory group Glass Lewis meanwhile has recommended votes against six board members at the bank's April 25 annual meeting.
"The findings showed that the board took the appropriate action with the information that it was given," Sanger told a media briefing. “I think we have taken full responsibly for making sure the changes are made to make sure that this never happens again."
Dennis Kelleher, president and CEO of Better Markets, a non-profit that advocates for tougher rules for Wall Street, said the board had a "see no evil, hear no evil" view of their role.
"Shareholders at the annual meeting should reject these deficient actions and hold the board accountable by voting against all board members and for a truly independent outside investigation," he said.
Clawbacks
John Stumpf, the CEO who retired under pressure from the scandal in October, was criticized for failing to grasp the gravity of the sales abuses and their impact on the bank.
In the 110-page report, Stumpf was described as blinded by Wells Fargo's cross-selling success. He refused to believe the model was seriously impaired and was full of admiration for Tolstedt, with whom he had a long working relationship. According to one director, Stumpf praised Tolstedt as the "best banker in America."
The report said Tolstedt hid the scale of the misconduct from the board, which only discovered that 5,300 staff had been fired for opening more than 2 million unauthorized accounts when the bank reached a $185 million settlement with regulators in September.