The former head of Wells Fargo & Co.'s Community Bank, Carrie Tolstedt, has agreed to pay a $3 million penalty to the Securities and Exchange Commission stemming from charges brought in 2020 for her role in allegedly misleading investors about the success of the Community Bank, Wells Fargo's core business.
The SEC previously settled related charges against Wells Fargo and its former CEO and Chairman, John Stumpf.
In addition to the $3 million civil penalty, Tolstedt agreed to pay disgorgement of $1,459,076 plus prejudgment interest of $447,874. The SEC states that it will combine this money with $500 million paid by Wells Fargo and the $2.5 million penalty paid by Stumpf in previous settlements and distribute the sum to harmed investors. The settlement is subject to court approval.
According to the SEC's complaint against Tolstedt, from mid-2014 through mid-2016, Tolstedt publicly described and endorsed Wells Fargo's "cross-sell metric" as a means of measuring Wells Fargo's financial success despite the fact that this metric was inflated by accounts and services that were unused, unneeded or unauthorized.
Tolstedt "knew the cross-sell metric did not accurately track accounts or products that customers needed or used, since she was aware of misconduct at the Community Bank that led to bankers pushing products on customers that they did not need or want, including the unauthorized opening of accounts," the complaint alleges.
Tolstedt, the complaint says, "made misleading public statements to investors at Wells Fargo's investor conferences in 2014 and 2016, and signed misleading sub-certifications as to the accuracy of Wells Fargo's public disclosures when she knew or was reckless in not knowing that statements in those disclosures regarding Wells Fargo's cross-sell metric were materially false and misleading."
