All articles tagged with #fake accounts scandal
The Federal Reserve has lifted the $2 trillion asset cap on Wells Fargo, imposed after the 2016 fake accounts scandal, marking a significant step in the bank's recovery and regulatory easing, allowing it to expand lending and business operations.
Wells Fargo announced that the Office of the Comptroller of the Currency has lifted a key penalty related to its 2016 fake accounts scandal, leading to a more than 5% jump in the bank's shares. This marks a significant milestone for the bank, which has retired six consent orders since 2019 under CEO Charlie Scharf's leadership, although eight more remain, including one from the Federal Reserve. The 2016 scandal and related consent order had prompted scrutiny and tarnished the bank's reputation, leading to the retirement of its former CEOs.
Federal prosecutors are recommending a one-year prison sentence for Carrie Tolstedt, the former head of Wells Fargo's retail banking division, for obstruction of a banking examination related to the bank's fake accounts scandal. Prosecutors accused Tolstedt of attempting to conceal the scandal from regulators and argued that corporate wrongdoers must be held accountable. In addition to the prison sentence, they also requested one year of supervised release. Tolstedt has already pleaded guilty to the charge and agreed to a ban on working in the banking industry and paying a $17 million civil penalty.
Wells Fargo has agreed to pay $1 billion to settle a class-action lawsuit brought on by shareholders who had accused the lender of overstating the progress of reforms initiated after the 2016 fake-accounts scandal. The settlement was filed late Monday in federal court in Manhattan, where litigation had been in progress for three years. The shareholders lawsuit centers on public statements and regulatory filings in which the bank touted its progress in complying with the consent orders between 2018 and 2020.