Directors at Wells Fargo have laid the blame for the sham accounts scandal largely at the door of former managers after a six month investigation into what went wrong.
Executives at the community banking division “resisted and impeded outside scrutiny or oversight”, the board found, while former group chairman and chief executive John Stumpf “was too slow to investigate or critically challenge” sales practices.
The directors are taking an additional $28m in bonus awards away from Mr Stumpf and $47m from community banking head Carrie Tolstedt, on top of previously disclosed clawbacks.
The board on Monday morning released a 110-page report in the scandal following a probe by a four-director oversight committee, assisted by independent counsel Shearman & Sterling. Directors launched the inquiry after thousands of branch staff created fake bank accounts for customers in a race to meet aggressive sales targets.
The board itself has come under intense scrutiny in the wake of the scandal. The influential advisory group ISS has recommended shareholders should vote to oust almost the entire board of directors, including the chairman Stephen Sanger.
“The Board was regularly engaged on the issue; however, management reports did not accurately convey the scope of the problem,” the board’s report said.
“The root cause of sales practice failures was the distortion of the Community Bank’s sales culture and performance management system, which, when combined with aggressive sales management, created pressure on employees to sell unwanted or unneeded products to customers and, in some cases, to open unauthorised accounts.”