Wells Fargo places two executives on leave

Move occurs amid regulatory investigations into the bank's sales practices

Oct 25, 2018 @ 12:21 pm

By Bloomberg News

Wells Fargo & Co. said its chief administrative officer and chief auditor will be placed on leave and removed from the bank's operating committee amid regulatory investigations into its sales practices.

The leaves of absence for Hope Hardison and David Julian aren't related to the bank's reported results, Wells Fargo said Wednesday in a statement. The firm said some executives under the two will now report directly to Chief Executive Officer Tim Sloan.

The moves show that the bank is still grappling with management fallout from a fake accounts scandal that erupted more than two years ago. Wells Fargo this week paid $65 million to New York state regulators over the issue and still faces a bevy of related lawsuits and regulatory probes.

With Wednesday's change, just three of the 10 members of Wells Fargo's operating committee as of February 2016 remain there today: Mr. Sloan, CFO John Shrewsberry and Avid Modjtabai, who leads the bank's tech-payments division. Carrie Tolstedt, who led the community bank where the fake-accounts scandal took place, and then-CEO John Stumpf both left the bank in 2016.

The two executives were placed on leave after the Office of the Comptroller of the Currency sent letters to each of them, the Wall Street Journal reported, citing people familiar with the matter. The OCC said that the executives had failed to oversee problems at the bank, the newspaper reported.

(More: Ex-Wells Fargo brokers sue for damages, claiming they lost business in wake of scandals)

Wells Fargo hired Mandy Norton from JPMorgan Chase & Co. to be chief risk officer earlier this year. David Galloreese, who joined Wells Fargo in June as head of human resources, will now report directly to Mr. Sloan and serve on the operating committee.

Wells Fargo said Tuesday it's hiring a new technology executive to oversee information security and information technology. This person will also report directly to Mr. Sloan and join the operating committee.

"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," Mr. Sloan said in Wednesday's statement.

Wells Fargo is searching internally and externally for a new chief auditor, and Kimberly Bordner, current executive audit director, will serve as Mr. Julian's replacement in the interim.

(More: Wells Fargo loses more reps in Q3; total now more than 1,000 since banking scandal broke)

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