But Tolstedt was left to deal with the issue and was “notoriously resistant to outside intervention and oversight” the report said.
Multiple board members felt misled by a presentation by Tolstedt and others to the risk committee in May 2015. The board members said they left thinking that between 200 and 300 employees had been fired for sales practice abuses and the problem was largely concentrated in southern California.
The report criticized the board for not centralizing risk functions at the bank earlier, not requesting more detailed reports from management and not insisting Stumpf get rid of Tolstedt sooner.
Tim Sloan, who replaced Stumpf as CEO, was described in the report as having little contact with sales practices at the bank before becoming chief operating officer and Tolstedt's boss in November 2015. Six months later he told her to step aside.
Since the scandal broke, the bank has ended sales targets, changed pay incentives for branch staff, separated the role of chairman and CEO and hired new directors to its board.
No Bad News, No Conflict
A big part of Wells Fargo's problem was its decentralized business model, which meant the retail bank was able to keep inquiries from head office at arm's length. There was no joined-up effort by either the bank's human resources or legal divisions to track and analyze the problem.
As far back as 2002, Wells Fargo's retail bank was taking steps to deal with sales practice violations and in 2004 an internal report recommended eliminating sales goals for employees.
That report was sent to, among others, the chief auditor, a senior in-house employment lawyer, retail bank HR personnel and the head of retail bank sales & service development. No action was taken.
Externally, Wells was lauded by investors for cross-selling customers multiple products and for its squeaky-clean reputation relative to peers following the financial crisis.