The former head of Wells Fargo Bank’s retail division agreed to be banned from the banking industry and to pay a US$17-million penalty for her role in the bank’s fake account scandal.
In a plea deal filed in a U.S. district court on Wednesday, Carrie Tolstedt, former senior executive vice-president of community banking with Wells Fargo, agreed to plead guilty to obstructing a bank examination. She is scheduled to appear in court on April 7.
At the same time, the Office of the Comptroller of the Currency (OCC) issued a prohibition order and a US$17-million civil penalty against Tolstedt, by consent.
The OCC said the settlement resolves its enforcement action against Tolstedt, which alleged that she was “significantly responsible for the systemic sales practices misconduct at the bank.” That misconduct included Wells Fargo employees opening millions of unauthorized bank accounts to meet their performance targets.
Previously, the bank admitted that its excessive sales goals drove its employees to open millions of unauthorized accounts and financial products allowing it to collect millions of dollars in unwarranted fees and interest, while harming customers’ credit ratings and misusing their personal information. In 2020, the bank paid a US$3-billion penalty to settle allegations from the U.S attorney’s office and the U.S. Securities and Exchange Commission.
“According to the plea agreement filed today, by no later than 2004, Tolstedt was aware of sales practices misconduct within the Community Bank,” stated the U.S. Attorney’s Office, Central District of California, in a release. The release stated that she also learned that these issues were increasing, and that the misconduct was likely linked to Wells Fargo’s excessive sales goals.
Furthermore, in 2015, Tolstedt was involved in the preparation of a memo to regulators that aimed to minimize the misconduct, the office stated.
“The plea agreement filed today sends a clear message that bank executives who commit fraud and deliberately deceive regulators will be brought to justice for their actions,” said Mark Bialek, inspector general for the board of governors of the Federal Reserve system and Consumer Financial Protection Bureau, in the release.
“Today’s plea agreement holds the defendant accountable for her role in obstructing the examination into the unlawful sales practices at Wells Fargo, which deceived millions of clients who placed their trust in the institution,” added Tyler Smith, acting inspector general with the Federal Deposit Insurance Corp.