Wells Fargo chief executive forfeits millions in wake of internal investigation into fake accounts

Wells Fargo To Shed 500 Jobs In Mortgage Unit
Wells Fargo has already settled over regulatory charges in connection with opening unauthorised accounts (Source: Getty)

Two leading Wells Fargo executives have agreed to forfeit $60m (£46m) over the ongoing bank account scandal as Janet Yellen came under pressure to order a break-up of the lender.

Chief executive John Stumpf will forego shares worth $41m and Carrie Tolstedt, the former head of the retail division, will miss out on $19m of shares after the company board ordered an investigation.

The penalties represent one of the biggest financial sanctions ever levied against executives and could be a watershed moment as despite various scandals in the sector, no chief executive has had to give back a bonus.

Read more: Wells Fargo CEO quits role as adviser to Federal Reserve

Separately, Janet Yellen, who has ultimately responsibility for financial supervision in her role as chair of the Federal Reserve, also faced tough questions over the role of banking regulation in the scandal. Yellen said: "It is very important that senior management be held accountable," and confirmed the Fed is "taking a comprehensive look" at a range of "disturbing" compliance issues at top US banks.

Although not having a large presence in the UK, the San Francisco-based lender is the third largest in the US by assets. The investigation is in response to claims that its employees opened as many as two million unauthorised new accounts using current customer names.

Wells Fargo has already agreed to pay $185m to settle regulatory charges and sacked over 5,000 employees.

Read more: Wells Fargo faces two more lawsuits over bank accounts scandal

Since the 2008 financial crisis, clawback provisions have been included in banks' bonuses. But the closest that a chief executive has come to being subject to one was when JP Morgan's Jamie Dimon had his bonus halved in 2012 following the $6.2bn trading losses in connection with the "London Whale".

Related articles