Wells Fargo’s troubles appear to be far from over.
In just the last week, the once-impenetrable megabank was ordered to pay $65 million for allegedly lying to investors about its retail sales practices that led to millions of fake accounts being opened in customers’ names, and calls for its CEO to resign grew louder thanks to Sen. Elizabeth Warren, D-Mass.
And now, there seems to be more trouble on the horizon.
Wells Fargo announced Wednesday that two of its top executives are taking “leaves of absence” for an unspecified length of time and will no longer serve on the company’s operating committee.
The executives in question are Chief Administrative Officer Hope Hardison and Chief Auditor David Julian. According to the bank, their leaves of absence are related to “previously disclosed ongoing reviews by regulatory agencies in connection with historical retail banking sales practices.”
What that likely means is that there are still regulators looking into the fake account situation and more sanctions are probably coming soon.
In fact, Bloomberg reported Wednesday that Hardison and Julian’s leaves of absence came directly after they received letters from the Office of the Comptroller of the Currency, signaling that they could be the subject of some sort of punishment.
From Bloomberg:
The letters, known as 15-day letters, are the agency’s way of saying it intends to pursue sanctions against the recipient. The person who receives the letter gets 15 days to respond to the accusations, and sanctions against individuals can include fines and temporary or permanent barring from the banking industry.
This would hardly be the first time that the OCC has taken action against Wells Fargo. Earlier this year, the OCC and the Consumer Financial Protection Bureau fined Wells Fargo $1 billion for mortgage and auto issues.
And the OCC was also part of the original $185 million fine against Wells Fargo for the fake accounts.
In the wake of Hardison and Julian’s departures, Wells Fargo made several moves among its leadership to fill their roles.
According to the bank, Hardison’s tasks as chief administrative officer will be filled by David Galloreese, who will continue as head of human resources and will report directly to the bank’s CEO and president, Tim Sloan. Galloreese will also join the bank’s operating committee. Cara Peck, who leads the culture and change management teams, will report directly to Galloreese.
Additionally, Jim Rowe will continue to lead stakeholder relations and will report directly to Sloan. Stakeholder relations will expand to include corporate philanthropy and community relations, which is headed by Jon Campbell.
Filling Julian’s role as chief auditor will be Kimberly Bordner, who is currently Wells Fargo’s executive audit director. Bordner will become the company’s acting chief auditor. According to the bank, it will conduct an internal and external search for the role.
Also, the company made some changes to its operating committee to replace Hardison and Julian.
Beyond Galloreese joining the operating committee, Chief Financial Officer John Shrewsberry will oversee data management and insights, led by Zac Maufe, and commitment to customer center of excellence, headed by Joe Rice.
Additionally, Avid Modjtabai, head of payments, virtual solutions and innovation, will assume responsibility for marketing, led by Jamie Moldafsky.
Chief Risk Officer Mandy Norton will take responsibility on an interim basis for integration and planning, led by Sophie Sharp, as the company “refines the final organizational alignment.”
Despite the abruptness of Julian and Hardison’s departures, Sloan said the company is prepared to fill their roles without disrupting the company’s operations.
“Because of the depth of our management team, we are confident in our ability to ensure an effective transition,” Sloan said in a statement. “During the past two years, we have become more customer-focused, made significant leadership and board changes, strengthened risk management and controls, simplified the organization, and invested in our team members. We remain steadfast in our focus on making things right for customers and building a better Wells Fargo.”
