The Office of the Comptroller of the Currency on Tuesday fined three former Wells Fargo executives a total of $18.5 million in connection with the bank’s 2016 fake-accounts scandal.
The OCC banned Wells Fargo’s former community bank group risk officer, Claudia Russ Anderson, from working in the banking industry for life and gave her a $10 million penalty, saying she failed, between 2013 and 2016, to credibly challenge an incentive program at the bank that the regulator found encouraged sales staff to create bank accounts for customers without their knowledge.
Further, Russ Anderson failed to institute effective controls to manage risks from sales practices misconduct, repeatedly downplayed that misconduct and provided false, incomplete or misleading information to the OCC during Wells Fargo’s 2015 examinations, the agency said.
Russ Anderson’s penalty matches recommendations made by an administrative law judge in December 2022.
The OCC also fined Wells’ former chief auditor, David Julian, $7 million, asserting he failed to plan and manage audit activity that would detect and document sales practices misconduct. Further, Julian failed to adequately escalate the sales practices misconduct, the regulator said.
The agency ordered Julian to cease and desist from unsafe and unsound practices and to comply with banking laws and regulations going forward. That’s a downgrade from the banking industry ban the administrative law judge recommended in 2022.
Paul McLinko, Wells Fargo’s former executive audit director, received a $1.5 million fine from the OCC on Tuesday, along with a cease-and-desist order, on the same grounds as Julian. The OCC also cited McLinko’s failure “to maintain professional independence from the Community Bank.”
Tuesday’s penalties are the last from the OCC against a swath of 11 executives linked to Wells’ fake-accounts scandal. The agency’s other penalties in the case totaled more than $43.1 million, including a $17.5 million fine and a banking ban for ex-Wells Fargo CEO John Stumpf and a $17 million fine against Carrie Tolstedt, who served as Wells’ retail banking chief at the time of the scandal. Tolstedt pleaded guilty in 2023 to one count of obstructing a bank examination and ultimately avoided prison time but agreed to a lifetime ban from working in the banking industry.
The OCC charged Russ Anderson, Julian and McLinko in January 2020, along with other executives, but the three opted not to settle. Lawyers for the three did not immediately respond to requests for comment from Reuters.
A Wells Fargo spokesperson declined to comment but directed attention to a 2020 statement CEO Charlie Scharf – then three months into his tenure at the bank – made on the matter.
“The OCC’s actions are consistent with my belief that we should hold ourselves and individuals accountable,” Scharf said at the time. “They also are consistent with our belief that significant parts of the operating model of our Community Bank were flawed.
“This was inexcusable. Our customers and you all deserved more from the leadership of this Company,” he said.
