Wells CEO Says Brokerage Unit Played Minimal Role in Scandal
Wells Fargo Chief Executive Tim Sloan told the Des Moines Register editorial board on Thursday that the bank’s Wells Fargo Advisors brokerage unit is far removed from the fake-account scandal that led to a $185 million settlement in September.
“There’s not a big issue there,” he reportedly said, when asked about allegations that Wells Fargo Advisors may have filed U-5 forms with the Financial Industry Regulatory Authority that distorted reasons for firing some employees. “It’s a fishing expedition from my perspective.”
In a letter to Sloan last week, Sens. Robert Menendez (D-NJ), Elizabeth Warren (D-Mass) and Ron Wyden (D-Ore) questioned whether the termination documents involved registered representatives who either participated in irregularities or were punished for whistleblowing about pressures to meet cross-selling goals.
Out of about 5,300 employees that Wells has said it fired over the past five years for fake-account sales practices, more than 600 involved registered reps, according to a published report. Finra has told congressional investigators that only 207 U-5 forms related to the separations indicated sham account allegations.
Some current and former Wells Fargo Advisor employees have told AdvisorHub they had occasionally tweaked investment return figures and expenses on “Envision” financial plans to meet “target zones” that would allow the plans to be accepted by internal systems. They said they and their managers were incentivized to create such plans as part of a long-term “Client Service and Loyalty Program,” even though they did not always show the plans to clients.
Wells Fargo spokespersons did not immediately respond to a request for comment on the allegations about the Envision plans or about whether Wells has responded to the senators.
Sloan, who was elevated to CEO in October after his predecessor John Stumpf resigned in the scandal’s glare, also held a town hall meeting with about 14,000 Wells employees in the greater Des Moines area on Thursday. Wells mortgage servicing unit is based in West Des Moines, and the bank is the region’s largest employer, according to the Register. Sloan’s son and daughter-in-law live in Ames, Iowa, the paper said.