As a result of the ongoing “massive” customer fraud scandal at Wells Fargo, which culminated not with prison time for anyone but with a $125 million bonus for the executive who oversaw the criminal practice, life for CEO John Stumpf, who as reported yesterday lost the top market cap spot for a US bank to JPM, just got more complicated, because not only is he set to testify in Congress in a few days, but as Dow Jones reports the Feds are now involved.
From the WSJ:
Federal prosecutors are in the early stages of an investigation into sales practices at Wells Fargo & Co. that led to the bank being hit last week with a $185 million fine, according to people familiar with the matter.
The investigation is being conducted by the U.S. Attorney’s Offices for the Southern District of New York and the Northern District of California, these people said. Prosecutors have yet to decide if any case, should they decide to pursue one, would be along civil or criminal lines, the people said. Prosecutors have issued a subpoena to the bank for documents and materials, the people added.
While in early stages, the investigation is focusing on whether someone senior within the bank directed employees to falsify documents in conjunction with the opening of accounts and products without consumers’ knowledge or authorization.
Prosecutors are also focusing on whether there was willful blindness to sales practices on the part of executives at the bank, these people said. Wells Fargo has acknowledged that it fired 5,300 employees over a five-year period related to improper sales practices. Chief Executive John Stumpf in an interview with The Wall Street Journal Tuesday said there were employees in the bank who didn’t “honor” the company’s values and so had to be let go.
To be sure, all that will take for the Federal prosecutors to back off is a quick conversation Bill Clinton and Loretta Lynch on some tarmac, somewhere, but in case that doesn’t happen, we wonder if that paragon of virtue, Warren Buffett, will be true to his famous words when he said that “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently”, and actually do something different and for once live up to his ideals by selling his WFC stake?