Shareholder sues Wells Fargo execs: Lawsuit seeks clawback of alleged improper profit
A Wells Fargo shareholder sued 17 directors and officers of the bank in San Francisco Superior Court Friday, seeking a clawback of improper profits they allegedly gained for allowing the creation of up to 2 million phony accounts.
The lawsuit was filed by William Sarsfield of San Carlos, a financial consultant who is a senior adjunct business professor at Golden Gate University in San Francisco.
It is based on legal claims of breach of fiduciary duty, unjust enrichment and waste of corporate assets.
The lawsuit asks for a court order requiring the officers and directors to repay the bank for all “improper benefits, profits and other compensation” they received plus the costs of regulatory fines, restitution to consumers and harm to the bank’s reputation
Sarsfield’s attorney, Joseph Cotchett of Burlingame, said in a statement, “This case represents a glaring example of a major bank that takes advantage of consumers all in the name of greed.
“It represents the culture of Wall Street to drive the stock price up in the name of false profits,” he said.
Wells Fargo spokeswoman Mary Eshet said the bank has no comment on the lawsuit.
On Sept. 8, the U.S. Consumer Financial Protection Bureau announced the bank agreed to pay $185 million in fines for creating about 1.5 million bank accounts and 565,000 credit card accounts that may not have been authorized by consumers.
The penalties included a $100 million fine levied by the bureau — the largest in the agency’s history; $35 million paid to the U.S. Office of the Comptroller of the Currency, and $50 million to the city of Los Angeles for its role in the investigation.
The bank has fired 5,300 employees for improper sale practices since 2011, according to a consent order issued by the bureau on Sept. 8.
The order said employees temporarily transferred money out of customers’ accounts without authorization, used fake email addresses and created false personal identification numbers to open the phony accounts so that the workers could obtain sales incentive pay.
The defendants in the lawsuit include Chief Executive Officer John Stumpf, Chief Financial Officer John Shrewsberry, and Carrie Tolstedt, head of the retail banking division in which the false accounts were created. She is retiring this year with $97 million in accumulated stock and stock options, according to Wells Fargo.
The other defendants are 14 directors. Stumpf is also a director.
The suit claims the senior managers should be held responsible for allegedly incentivizing the illegal sales by setting unrealistic sales goals for employees so that the executives then could boast of continuous growth of the bank and receive lucrative compensation... (To read the entire article, please click HERE)