Ex-Wells Fargo executive pays US$3m for false accounts scandal

Carrie Tolstedt, a former senior executive at Wells Fargo, has agreed to settle charges brought by the SEC in 2020 in relation to the false accounts scandal, for US$3m.

Tolstedt, who was head of community banking at the time, was accused by the SEC of misleading investors about the success of the Community Bank, Wells Fargo’s core business. 

According to the SEC, from mid-2014 to mid-2016, Tolstedt publicly described and endorsed Wells Fargo’s “cross-sell metric” as a means of measuring Wells Fargo’s financial success. She allegedly did this despite knowing that the metric was inflated by accounts and services that were unused, unneeded, or unauthorised – set up by sales staff who were under pressure to meet their targets. 

The SEC says Tolstedt knew the cross-sell metric did not accurately track accounts or products that customers needed or used, since she was aware of misconduct at the Community Bank that led to bankers pushing products on customers that they did not need or want, including the unauthorised opening of accounts. 

Tolstedt is accused of making misleading public statements to investors at investor conferences in 2014 and 2016, and of signing “misleading sub-certifications as to the accuracy of Wells Fargo’s public disclosures when she knew or was reckless in not knowing that statements in those disclosures regarding Wells Fargo’s cross-sell metric were materially false and misleading.” 

On top of the US$3m, Tolstedt agreed to pay disgorgement of US$1,459,076 plus prejudgment interest of US$447,874. The SEC says it will combine this money with the US$500m fine paid by Wells Fargo and the US$2.5m paid by ex-CEO John Stumpf in previous settlements, and give it to “harmed investors.”

Tolstedt will settle the case without admitting or denying the charges. The settlement is subject to court approval.