Wells Fargo & Co. (NYSE:WFC) has released a warning that there may be more victims of the account scandal that rocked the bank last year. The bogus-account scandal involved how employees pitched accounts and other products to customers. Employees of the bank were accused of opening more than 2 million retail bank accounts without customers’ approval. The bank vowed to investigate what happened and provide restitution to affected customers.
The bank has expanded its review of the scandal to cover a broader time frame and revised its methodology to identify improper sales. The company said in its annual regulatory filing, “This work could lead to, among other things, an increase in the identified number of potentially impacted customers.” The company said any additional reimbursements probably won’t “have a significant financial impact.” Wells Fargo has spent $3.2 million providing refunds to customers so far.
The bank also announced that it would be withholding 2016 cash bonuses and claw back equity-linked compensation from eight senior executives being held accountable for the accounts scandal. The pay actions affect Chief Executive Officer Tim Sloan, Chief Financial Officer John Shrewsberry, Chief Risk Officer Michael Loughlin, Chief Administrative Officer Hope Hardison, Chief Auditor David Julian, General Counsel James Strother, and business heads David Carroll and Avid Modjtabai. The executives affected stand to lose about $32 million in pay and equity awards they received in 2014 that vested last year.
The pay actions were decided Feb. 28. The moved follow previously announced forfeitures of $41 million in unvested stock awards by now-retired Wells Fargo CEO John Stumpf and $19 million in comparable forfeitures by Carrie Tolstedt, the former head of the community banking division. The bank said the pay actions were not based on any finding of wrongdoing by any of Wells Fargo’s current top management team. Authorities had fined the company $185 million for its activities surrounding the scandal.
The company also announced that U.S. authorities are examining whether other banks used its technology to violate international sanctions. Wells Fargo said it uncovered information that showed overseas banks were using its software tools to help finance trade with countries and entities subject to U.S. sanctions. The bank reportedly alerted the Treasury Department’s Office of Foreign Assets Control to the matter and is cooperating with an investigation spearheaded by the Justice Department. According to Wells Fargo’s statement, it looks unlikely that any of the transactions in question flowed through accounts at the bank.
