The Wells Fargo Banker at Helm of Fake Account Scandal Agrees to Pay Nearly $5 Million to Settle SEC Fraud Charges

The Wells Fargo executive accused of juicing profits by creating fraudulent customer accounts agreed to pay nearly $5 million to settle fraud charges by the Securities and Exchange Commission.

Carrie L. Tolstedt, Wells Fargo's former head of retail banking, agreed to pay a $3 million fine and roughly $1.9 million in disgorgements and interest to settle SEC charges of allegedly misleading investors about the bank's performance between 2014 and 2016, the SEC said in a statement announcing the deal Tuesday. Tolstedt, who pled guilty in March to criminal charges of obstructing a bank exam, didn't admit nor deny wrongdoing in her settlement with the SEC.

According to the SEC complaint filed in the U.S. District Court for the Northern District of California, Tolstedt used a “cross-sell metric” that inflated the bank's performance by counting fake or unauthorized accounts opened by employees to meet the company's high sales goals. 

This settlement comes on the heels of Tolstedt’s ban from working in the banking industry in March and her payment of a $17 million civil penalty to the U.S. Department of Treasury, according to the Office of Comptroller of the Currency.

Wells Fargo paid a total of $3 billion to the SEC and the U.S. Department of Justice in 2020 for its yearslong practice of pressuring employees to use bad tactics to meet sales goals, according to a press release from the U.S. Attorney’s Office in the Central District of California. 

Former CEO and Chairman John G. Stumpf paid $2.5 million in 2020 for endorsing the use of the misleading “cross-sell metric.” 

Tolstedt agreed to disgorge $1.5 million in ill-gotten gains and $447,874 in interest as well as a $3 million fine. The SEC said the $5.5 million Stumpf and Tolstedt paid in fines as well as the $500 million Wells paid to settle its case will go to investors harmed by the fake accounts scandal. The settlements are subject to court approval.