Wells Fargo launches investigation into retail banking sales practices

The bank agreed to pay $190 million earlier this month to settle regulatory charges

Wells Fargo & Co said on Tuesday that Chief Executive John Stumpf will forfeit unvested equity awards worth about $41 million and will not get a salary during an independent investigation into the bank's sales practices.

Former retail banking head Carrie Tolstedt has left the company, will get no severance and has forfeited unvested equity awards worth about $19 million, the bank said.

Stumpf and Tolstedt will also not receive bonuses for 2016.

Wells Fargo, the United States' third-largest bank by assets, agreed to pay $190 million earlier this month to settle regulatory charges that some of its employees opened as many as 2 million accounts without customers' knowledge, in order to meet sales targets.

 

Stumpf, a member of the board, has recused himself from the investigation, the bank said.

Lawmakers on the US Senate Banking Committee grilled Stumpf about the accounts last week, with some calling on him to resign and forfeit his earnings and hold other senior executives accountable. 
 

Stumpf is scheduled to testify at a congressional hearing on Thursday.

The San Francisco-based bank has fired 5,300 people over the matter and had said it would eliminate sales goals in its retail banking on January 1, 2017.

However, the Wall Street Journal reported earlier on Tuesday that the firm was planning to eliminate the goals on October 1, citing Stumpf's prepared remarks for delivery at the hearing.

Wells Fargo has hired law firm Shearman & Sterling LLP to assist in the investigation.

Up to Tuesday's close, shares of the company have fallen nearly 10 per cent since September 8 when it reached a settlement with regulators, wiping off about $24 billion of market capitalisation.