It has now been a year since industry regulators revealed the sales scandal at Wells Fargo (NYSE: WFC). As the following timeline shows, a lot has happened since then at the 165-year-old bank.
Continue Reading Below
Wells Fargo sales scandal timeline
Dec. 21, 2013 -- The Los Angeles Times reports that "relentless pressure to sell has battered employee morale and led to ethical breaches" at Wells Fargo. "To meet quotas, employees have opened unneeded accounts for customers, ordered credit cards without customers' permission, and forged client signatures on paperwork."
Sept. 8, 2016 -- The Consumer Financial Protection Bureau (CFPB) reveals that thousands of Wells Fargo employees opened 2 million deposit and credit card accounts that consumers may not have authorized.
Sept. 13, 2016 -- The chairman and CEO of Wells Fargo, John Stumpf, goes on Jim Cramer's show, Mad Money, in his first interview since the scandal was revealed. Stumpf appears to assign blame for the misconduct, which ultimately spanned a decade and a half and occurred throughout Wells Fargo's nationwide footprint:
We have at any one time 100,000 team members in our branch and retail bank network. And we hire people, and people turn over. Of those 100,000, the vast majority do the right thing, they come to work. Their life's work and mission is to help people. And I love these people. Every year -- on average for the last five years, 1,000 did not do the right thing.
Continue Reading Below
Sept. 20, 2016 -- Stumpf testifies about the scandal to the Senate Banking Committee. He's panned in the media for being insufficiently contrite and unprepared for the senators' questions.
Sept. 27, 2016 -- The independent members of Wells Fargo's board announce that Stumpf will forfeit $41 million in unvested equity awards and not be paid a bonus for 2016. It was also announced that the former head of the bank's retail unit, Carrie Tolstedt, had left the company and will forfeit $19 million in unvested equity awards, and similarly not receive a bonus for 2016.
Sept. 29, 2016 -- Stumpf testifies before the House of Representative's Committee on Financial Services.
Oct. 12, 2016 -- Stumpf resigns as chairman and CEO. President and Chief Operating Officer Tim Sloan succeeds him at CEO, while former lead independent director Stephen Sanger becomes chairman. Stumpf says:
I am grateful for the opportunity to have led Wells Fargo. I am also very optimistic about its future, because of our talented and caring team members and the goodwill the stagecoach continues to enjoy with tens of millions of customers. While I have been deeply committed and focused on managing the company through this period, I have decided it is best for the company that I step aside. I know no better individual to lead this company forward than Tim Sloan.
As the new CEO, my immediate and highest priority is to restore trust in Wells Fargo. As you know, on Sept. 8, we announced settlements with the CFPB, the OCC [Office of the Comptroller of the Currency], and the Los Angeles city attorney related to sales practices in retail banking. I know that this is not the type of activity you expect from Wells Fargo and is certainly not what we expect from ourselves. We let down our customers, our shareholders, and our team members. We simply failed to fulfill our responsibility to all our stakeholders.
Nov. 17, 2016 -- Issues first in a series of monthly updates on the performance of its retail unit in the wake of the scandal. The impact is seen in the 44% drop in the number of new consumer checking accounts opened in October compared with the year-ago period, as well as a 50% decline in new credit card applications.
Nov. 29, 2016 -- Wells Fargo's board of directors amends the bank's bylaws to require the separation of the chairman and CEO roles and for the chairman and vice chairman of the board to be independent directors. According to the bank's newly elected chairman, Stephen Sanger:
The board previously acted to elect an independent chairman to lead the board, and we believe formalizing this structure is the right decision at this time for the company and its investors, customers, and team members. Efforts to restore the trust of our customers and team members are well underway and will continue until we have fully addressed the issues surrounding retail banking sales practices. While the investigation of these practices and related matters by the independent directors continues in earnest, we believe this action will enhance the board's independence and its oversight of the company's management, and we appreciate the feedback that we received from our investors on this matter.
Feb. 20, 2017 -- Wells Fargo elects two new independent board members: Karen B. Peetz, retired president of The Bank of New York Mellon, and Ronald L. Sargent, retired chairman and CEO of office-supply retailer Staples.
Feb. 21, 2017 -- Wells Fargo fires four former leaders of its retail bank.
March 1, 2017 -- Wells Fargo reports that no members of its executive committee will receive bonuses for 2016 and that equity awards they received in 2014 that vest after 2016 will be reduced by up to 50%. The result is an aggregate reduction in compensation totaling approximately $32 million, according to the bank. Sanger says:
These compensation actions for the Operating Committee, though not related to any findings of improper behavior, are part of the board's ongoing efforts to promote accountability and ensure Wells Fargo puts customer interests first. As we seek to regain trust, the board is taking decisive actions. We will continue to work to make right what went wrong and remain focused on providing the accountability and oversight that our customers, employees, and investors expect and deserve.
March 21, 2017 -- Sloan hosts a companywide town hall meeting to introduce six new long-term goals and preview a new national advertising campaign entitled "Building Better Every Day." From Sloan's prepared remarks:
We're making things right for our customers and our team members. We are fixing problems, and we're building a better bank for the future. As we rebuild trust, we will reintroduce to our stakeholders what our Wells Fargo bankers have always been known for, and that's helping our customers to succeed financially.
March 28, 2017 -- The OCC, the primary regulator for national banks, downgrades Wells Fargo's Community Reinvestment Act (CRA) rating to "Needs to Improve" as a result of "previously issued regulatory consent orders." Sloan says:
We are disappointed with this rating given Wells Fargo's strong track record of lending to, investing in, and providing service to low- and moderate-income communities. However, we are committed to addressing the OCC's concerns because restoring trust in Wells Fargo and building a better bank for our customers and our communities is our top priority. Wells Fargo is deeply committed to economic growth, sustainable homeownership and neighborhood stability in low- and moderate-income communities and will continue to invest above and beyond what is required by CRA.
March 28, 2017 -- Wells Fargo says that it reached a $110 million agreement to settle a class action lawsuit filed in May 2015 over the bank's retail sales practices. Sloan says:
This agreement is another step in our journey to make things right with customers and rebuild trust. We want to ensure that each customer impacted by our sales practices issue has every opportunity for remediation, and this agreement presents an additional option. We continue to encourage customers to contact us directly so that we can act quickly to refund fees and address any concerns.
April 4, 2017 -- CEO Tim Sloan publishes open letter to the bank's customers to "thank them for their loyalty" and share updates regarding its retail sales practices. Sloan says:
As we work toward rebuilding the trust of our customers, team members, community partners, and shareholders, we are committed to keeping our stakeholders informed. This is why we are not only thanking them, but also sharing the significant progress we have made to make things right, fix problems, and build a better Wells Fargo, recognizing much work remains that we are committed to do.
April 7, 2017 -- Proxy advisory firm Institutional Shareholder Services issues a report urging shareholders to vote against the re-election of 12 out of the bank's 15 board members. Wells Fargo's board responds with a prepared statement laying out eight steps the bank has taken in response to the sales scandal.
April 10, 2017 -- Wells Fargo releases the findings of an investigation into the company's retail sales practices overseen by a special committee of the bank's independent directors and assisted by the law firm Shearman & Sterling. Sloan says:
The board's report is a necessary examination of what went wrong in our culture, operations, and governance. It's clear from the board's review that we had an incentive program and high-pressure sales culture in our Community Bank that over time drove behavior that in many cases was inappropriate and inconsistent with our values. Because of our decentralized operating model, our corporate leadership took too long to understand the seriousness and scope of the problem, and as a result, the actions we took over the years to address it weren't adequate.
April 13, 2017 -- Wells Fargo reports first-quarter earnings. The bank's bottom line was flat, at $5.5 billion, but a number of other critical metrics show signs of strain, including its efficiency ratio and return on assets.
April 17, 2017 -- The bank launches the previously announced marketing campaign, Building Better Every Day.
April 21, 2017 -- Wells Fargo expands its class action settlement, previously announced in March, to include any customers who were affected by sales practice issues as early as May 2002, pushing the covered range back by seven years. The updated settlement will total $142 million. Sloan says:
The expansion of this agreement is another important step to make things right for our customers. On our journey to rebuild trust, we want to ensure our customers feel confident that we have heard their concerns about retail sales practices, which includes offering them numerous opportunities for remediation. We encourage any customer with concerns or questions about their accounts to contact us.
April 25, 2017 -- Wells Fargo holds its annual meeting. Shareholders vent their ire at the bank by, among other things, reelecting the bank's board members with such underwhelming majorities that the results are seen by corporate governance experts as a vote of no confidence in all but three members of the board.
July 6, 2017 -- The bank forms a new stakeholder-relations group to "foster a more integrated approach to engaging with its key stakeholders." Former director of investor relations Jim Rowe is promoted to lead the group, reporting to Chief Administrative Officer Hope Hardison, who says:
As Wells Fargo continues to focus on rebuilding trust and building a better bank, it's more important than ever that our key stakeholder relationships and strategies are well integrated. During a decade in investor relations, Jim has become a trusted leader at Wells Fargo. His knowledge of our businesses and proven ability to partner across the company make him ideal to advance our efforts to create an aggregated stakeholder view.
July 8, 2017 -- The class action settlement for retail sales practices receives preliminary court approval. Sloan says:
We are pleased that the court found the settlement to be fair, reasonable, and adequate. This preliminary approval is a major milestone in our efforts to make things right for our customers. It further ensures each customer impacted by an improper retail sales practice has every opportunity for remediation. This is in addition to our direct efforts to review accounts and provide remediation. These efforts are fundamental to restoring trust with all our stakeholders and building a better Wells Fargo for the future.
July 27, 2017 -- Wells Fargo discloses that a separate internal investigation uncovered 570,000 customers with car loans form the bank who may have been inappropriately charged for failing to maintain qualifying insurance on their cars. "For approximately 20,000 customers, the additional costs of the insurance could have contributed to a default that resulted in the repossession of their vehicle," says the bank. Franklin Codel, head of Wells Fargo consumer lending, states:
We take full responsibility for our failure to appropriately manage the CPI [collateral protection insurance] program and are extremely sorry for any harm this caused our customers, who expect and deserve better from us. Upon our discovery, we acted swiftly to discontinue the program and immediately develop a plan to make impacted customers whole.
Aug. 4, 2017 -- Sloan issues a companywide message on the bank's "rebuilding trust efforts," noting among other things that "[b]ecause there is so much interest in the work we are doing to rebuild trust, we can expect more headlines as we fulfill our commitment to identify and fix problems and make things right for our customers."
Aug. 15, 2017 -- Wells Fargo announces that three members of its board, including chairman Stephen Sanger, will retire at the end of the year. Former Federal Reserve governor Elizabeth "Betsy" Duke was unanimously elected by the board to replace Sanger, who says:
Betsy was the unanimous choice to lead the board as it continues its focus on strengthening oversight and rebuilding the trust of shareholders, customers, and other stakeholders. Her broad understanding of the financial system and markets combined with years of main street community banking experience make her the ideal chair to work with the rest of the board and Tim Sloan as Wells Fargo continues to move forward.
Aug. 22, 2017 -- Sloan issues a companywide message "to address team member questions and provide updates on the steps the company is taking to make things right for customers and build a better Wells Fargo."
Aug. 31, 2017 -- Wells Fargo reports the results of its expanded third-party review of its retail sales practices, increasing the number of potentially fake customer accounts up from 2.1 million to 3.5 million.
10 stocks we like better than Wells Fargo
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Wells Fargo wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of September 5, 2017