Mega-bank Wells Fargo continues to be battered for their cross-selling scandal that first made headlines in 2016. The latest development calls for another $18.5 million fine on three former executives, following a recommendation by administrative Judge Christopher McNeil in December. 

McNeil stated that there was “inculpatory evidence” that Claudia Russ Anderson (former community bank group risk officer), David Julian (former chief auditor), and Paul McLinko (former executive audit director), could have done more to prevent wrongdoing.

His official report stated that their “conduct constituted unsafe or unsound practice and violated the fiduciary duties.”

McNeil had then recommended the Office of the Comptroller of Currency (OCC) fine the executives $10 million, $7 million, and $1.5 million, respectively. He had also suggested that Russ Anderson and Julian be barred from working in banking and that McLinko be given a cease-and-desist order. The OCC was given 90 days to approve or deny the recommendations.

Russ Anderson, Julian, and McLinko all claimed they were innocent at the time and given 30 days to appeal the decision in court. Wells Fargo also issued a statement that they were planning to fight the new fines, claiming the new charges too harsh.

“We are very disappointed by the decision but not surprised by it,” stated Matthew Martens, Julian’s attorney. 

So far, there has been no update on the state of this case.

Crime and Punishment

Reports of Wells Fargo’s unethical behavior started to surface way back in 2013 but only made the news three years later after there were widespread customer complaints about receiving unexpected debit/credit cards and being charged with surprise fees.

Investigations into the bank’s activities opened in February 2020, after which it was discovered that Wells Fargo opened over 3.5 million various accounts under unsuspecting customers' names in order to boost sales goals.

The bank has since agreed to a $3 billion settlement and has been hit with millions of dollars in fines. To make amends, they also restructured their business, reshuffled their board of directors, and saw multiple executives fired. Regulators also forced Wells Fargo to cap their total assets and continue to keep an eye on their activities.

The former CEO, John Stumpf, has been banned from working in the banking industry.

Reputation Is Everything

Wells Fargo has been keen on repairing their reputation since the scandal hit mainstream media, and issued a statement last year that “there's more work we must do to rebuild trust, and we are committed to doing that work.”

Being one of the oldest and largest banks in the U.S., executives consider resolving this matter a top priority. And Wells Fargo, for the most part, has been very cooperative in all discussions.

However, some also believe that the punishment no longer fits the crime, especially as regulators continue to batter the bank years after.

Although some believe Wells Fargo has paid their dues, others still think more needs to be done, given the grand scale of the scandal.

Some also believe that this case will set an example and serve as a deterrent for any future Wall Street criminals.

“The fact that a large institution of such importance was nevertheless able to engage in fraud and effectively illegal transactions on such a scale — that is staggering,” said Saule T. Omarova, a professor at Cornell Law School.

Even though Wells Fargo has put plenty of effort into restoring its tarnished reputation, it appears that there is more work to be done.

“We have made significant progress over the last three years and are a different company today,” said current Wells Fargo CEO Charlie Scharf, adding, “We remain committed to doing the right thing for our customers."