Wells Fargo

In September 2016, the Consumer Financial Protection Bureau fined Wells Fargo $185 million — then the largest fine in CFPB history — for opening 1.5 million deposit accounts and 565,000 credit cards without customer authorization. The scope was later revised to 3.5 million accounts spanning 14 years. Customers were charged fees on accounts they never opened.

• —Penalty breakdown: $100M to CFPB, $50M to the City and County of Los Angeles, $35M to the OCC.
• —Wells Fargo had simultaneously been reporting rising cross-sell ratios to investors as evidence of business health — ratios the bank knew were inflated by fraud.
• —The original figure of 2 million unauthorized accounts was later revised upward to 3.5 million through expanded investigation.
• —The fraud spanned 2002–2016 — 14 years of continuous operation at scale.

Source:CFPB enforcement order, September 2016

CEO John Stumpf's "Gr-eight" initiative set a target of 8 financial products per customer. Branch employees faced daily quotas, tracked by supervisors, with termination threatened for falling short. By Wells Fargo's own accounting, 5,300 workers were fired for fraud-related conduct during this period. The bank called it "accountability." Federal investigators called it what it was: workers fired for failing to meet quotas no one could meet honestly.

• —5,300+ employees were fired for fraud-related conduct between 2011 and 2016 — Wells Fargo's own figure.
• —Many fired workers had opened unauthorized accounts to survive. Others were fired for reporting fraud to supervisors or the ethics hotline.
• —Carrie Tolstedt, who ran the Community Banking division and set the quotas, received a $124.6 million exit package in July 2016 — three months before the CFPB action.
• —Stumpf praised Tolstedt as "one of our most talented bankers" in a press release at her departure. She was later charged by the OCC and SEC.
• —The CFPB enforcement order found the quota system was the structural cause — not rogue employees.

Source:Senate Banking Committee staff report, September 2016

Wells Fargo maintained an ethics hotline. Employees who used it to report unauthorized account openings were, in documented cases, reported by HR back to their managers and subsequently terminated — for "gaming" or "creating a hostile work environment." Multiple former employees testified to Congress that they were fired within weeks of making internal fraud complaints.

• —Senator Robert Menendez entered documented termination cases into the congressional record during the September 2016 hearings.
• —When asked whether the bank had retaliated against whistleblowers, CEO Stumpf testified he was "not aware" of any such cases.
• —The Senate Banking Committee found that the ethics hotline — designed as a safety valve — functioned as a reporting system that identified employees as liabilities.
• —Workers who refused to open unauthorized accounts and workers who reported the fraud were both at risk of termination. The ethical choice and the whistleblower choice had identical consequences.

Source:Senate Banking Committee hearing, September 20, 2016

In February 2020, Wells Fargo agreed to pay $3 billion to resolve criminal and civil investigations by the Department of Justice and the SEC, covering the unauthorized account fraud across a 14-year period. Wells Fargo entered a deferred prosecution agreement on two felony counts: conspiracy to commit bank fraud, and making false bank entries. Criminal charges would be dismissed if the bank complied with the agreement's terms. No individual was criminally charged.

• —The two criminal counts acknowledged: conspiracy to commit bank fraud, and making false bank entries.
• —A deferred prosecution agreement means the charges are held in abeyance — no conviction on record unless the company violates terms.
• —No individual executive was criminally charged in connection with the DOJ resolution.
• —"This settlement holds Wells Fargo accountable for tolerating fraudulent conduct" — DOJ statement, February 21, 2020.
• —The $3B settlement combined criminal penalties and civil payments to the SEC.

Source:DOJ press release, February 21, 2020

In January 2020, the Office of the Comptroller of the Currency announced enforcement actions against eight former senior Wells Fargo executives — the largest number of personal charges against executives of a single bank in OCC history. CEO Stumpf received a $17.5 million fine and a lifetime ban from the banking industry. Carrie Tolstedt received a $25 million fine — at the time the largest individual OCC fine ever issued.

• —John Stumpf (CEO): $17.5M civil monetary penalty + lifetime prohibition from banking.
• —Carrie Tolstedt (Head of Community Banking): $25M + prohibition order — the largest individual OCC fine in bureau history at the time.
• —Claudia Russ Anderson (Community Bank Risk Officer): $5M + prohibition. The OCC found she made "false and misleading statements to the OCC and actively obstructed OCC examinations."
• —James Strother (General Counsel): $5M + cease and desist.
• —David Julian (Chief Auditor): $2M + cease and desist.
• —Paul McLinko (Executive Audit Director): $500K + cease and desist.
• —None of the eight executives faced criminal charges. None served time.

Source:OCC press release, January 23, 2020

On September 20, 2016, CEO Stumpf testified before the Senate Banking Committee. Senator Elizabeth Warren — who had fought to create the CFPB that just fined his bank — called him "gutless" and called directly for his resignation and a criminal referral. Stumpf resigned 22 days later. He forfeited $41M in unvested equity; the board clawed back another $28M. He retained over $100M in previously vested compensation accumulated during the 14 years the unauthorized accounts were open.

• —Warren to Stumpf at the September 20 hearing: "You should resign. You should give back the money that you took while this scam was going on, and you should be criminally investigated."
• —Stumpf sold $13 million in Wells Fargo stock after the cross-sell program was publicly praised in earnings calls — while, Warren argued, knowing about the underlying fraud.
• —Stumpf resigned October 12, 2016. Forfeited $41M unvested equity + $28M board clawback = $69M returned.
• —His retained compensation — vested equity, salary, bonuses accumulated during the fraud years — exceeded $100M.
• —In November 2020, the SEC filed civil charges against Stumpf for misleading investors about the cross-sell ratio. He agreed to pay $2.5M and accept a bar from serving as officer or director of a public company.
• —No criminal charges were ever filed against John Stumpf.

Source:SEC charges — Stumpf and Tolstedt, November 13, 2020