Wells Fargo & Co. President and CEO Timothy Sloan told investors that the bank discovered recent incidents of employees inappropriately altering business clients' data after other employees sounded alarms.
"The way that we learned that we had some team members that were doing things in an inappropriate way is that other team members saw them; they raised their hand," Sloan said May 31 while speaking at a Sanford C. Bernstein conference. "It was investigated and we were able to address the issues."
Sloan discussed the matter in response to an analyst's question. The Wall Street Journal first reported on the issue earlier this month, noting that staffers in Wells' wholesale unit added or changed certain customers' information — ranging from dates of birth to Social Security numbers — without those clients' knowledge. The Journal reported that the misbehavior occurred in 2017 and early this year as the bank was working in earnest to comply with a regulatory consent order linked to its anti-money laundering compliance.
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Wells Fargo CEO Timothy Sloan Source: Associated Press |
The misinformation was entered in an anti-money laundering disclosure form that is intended to show proof of beneficial ownership of a business, the newspaper reported.
Sloan did not dispute those details, but he initially downplayed the incidents' significance. "Part of the issue, candidly, was the quality of the training that we were providing to our team members," he said. "That was feedback we got from them, and we improved that."
When the analyst asked for more detail, however, Sloan said that a review of the matter is ongoing. He added: "It wouldn't surprise me if we found some activity, again, that was beyond just a lack of training."
Wells has struggled under the weight of public doubt and intense regulatory scrutiny since September 2016, when authorities fined the bank for allowing its retail staffers to open millions of fake accounts. The bank has unearthed a series of other customer-service problems in the months since. These range from mortgage and auto insurance abuses to allegations of unethical treatment of wealth management clients.
But Sloan has told investors that these problems were largely contained to previous years — prior to his ascension to the chief executive role in the fall of 2016. The timing of the new AML problem is therefore notable; it could suggest that more public image problems and regulatory challenges lie ahead.
Already this year, regulators hit Wells with an additional $1 billion in fines and ordered it to limit its asset size at the level it finished 2017 — penalties that have pushed up costs and added to Wells' struggles to grow lending and revenue over the past several quarters.
At the conference, an analyst asked Sloan if he still believed he was the right person to lead Wells out of the long shadow of scandal, given that, while he was not yet CEO, he was a top manager at the bank when the bulk of its phony-account problems occurred.
Sloan noted that, during his tenure as CEO, Wells has substantially beefed up its internal controls and oversight of risk; it has removed managers of troubled teams and brought on new board members with banking and risk-control experience; and it has bolstered training programs for employees and altered incentive programs to encourage staffers to focus on improved customer service.
"I'm an at-will team member just like everybody at Wells Fargo," he said. "And having said that, I think there has been some concern that, 'Can an insider change a company?' And I think that's a fair question. But I would just ask you to look at the fundamental changes that we've made at the company and come to your own conclusion."

