Wells Fargo Claws Back Millions in Compensation

April 12, 2017 by · Leave a Comment 

LOS ANGELES  – Los Angeles City Attorney Mike Feuer said Monday the Wells Fargo board’s decision to claw back $75 million in compensation from two ex-executives it blames for much of the company’s sales scandal is a “positive step,” but falls short.

Feuer’s office last year settled a lawsuit it brought against the bank after some of its employees created more than two million unauthorized accounts as a way to meet aggressive sales goals set by management.

The settlement resulted in $50 million in civil penalties for the city of Los Angeles and $135 million for two federal agencies, and Wells Fargo was ordered to provide restitution to affected customers.

“From the moment we sued Wells Fargo over fake accounts through the time we resolved the case, the bank seemed determined to blame and fire low-level employees, rather than take responsibility at the top,” Feuer said in a prepared statement.

“While clawing back outrageous bonuses from people in charge when the scandal erupted is a positive step, providing full restitution to affected customers is imperative,” he said. “Pursuant to our settlement, next month Wells will report to me on its progress toward doing just that. My office and
our federal partners will continue to watch closely and take any further action necessary to hold Wells or other big banks accountable.”

Wells Fargo is seeking a total of $75 million from former chief executive John G. Stumpf and its former head of community banking, Carrie L. Tolstedt.

Supervisors Consider Using $25M Wells Fargo Settlement to Investigate Other Consumer Protection Violations

November 22, 2016 by · 1 Comment 

Los Angeles County officials are considering how to spend $25 million in legal penalties levied on Wells Fargo, with some proposing Tuesday, Nov. 22 that a new litigation division be set up to target violators of consumer protection laws.

The bank is set to pay $50 million in civil penalties to resolve litigation involving bank accounts set up without customers’ permission. The money, to be split between the county and city of Los Angeles, is in addition to at least $135 million in penalties paid to two federal agencies over similar allegations.

The payments settle a lawsuit brought by City Attorney Mike Feuer, filed after the Los Angeles Times reported that fake accounts were created without customers’ knowledge and caused them to rack up bank fees.

Supervisors Hilda Solis and Mark Ridley-Thomas pointed to Feuer’s success as potential justification for setting up a unit of county attorneys targeting those who routinely ignore consumer protections.

By law, the funds must be used by either the District Attorney or County Counsel. However, the money could be spent on a wide range of efforts, including enforcing minimum wage violations, battling fraudulent immigration consultants, expanding legal assistance centers, identifying theft among foster youth or establishing a Center for Financial Empowerment, according to the
supervisors’ motion.

The Los Angeles City Council recently budgeted roughly $5.8 million to fund Feuer’s consumer protection division.

Wells Fargo officials have said the agreements were made with its customers in mind and out of a desire to show accountability.

“Wells Fargo is committed to putting our customers’ interests first 100 percent of the time, and we regret and take responsibility for any instances where customers may have received a product that they did not request,” the company said in a statement issued in September when the settlement was announced.

“Our entire culture is centered on doing what is right for our customers. However, at Wells Fargo, when we make mistakes, we are open about it, we take responsibility and we take action. Today’s agreements are consistent with these beliefs.”

The Consumer Financial Protection Bureau, one of the federal agencies that also reached a settlement with Wells Fargo, alleged that the bank opened hundreds of thousands of deposit and tens of thousands of credit card accounts without their customers’ knowledge or permission.

The fake accounts were set up by bank employees to achieve sales goals and reap financial incentive rewards, and the bank fired about 5,300 employees as the result of the allegations, according to the CFPB.

The Board of Supervisors asked for a report back in 60 days.

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