[9/30/16] Wells Fargo CEO John Stumpf’s phony accounts problem just got worse.
Thursday, during a Congressional hearing on the scandal, Rep. Carolyn Maloney (D-NY) accused Stumpf of using insider information about the phony accounts to cash in $13 million worth of his own shares before knowledge of the fraudulent activity at Wells Fargo WFC 0.00% became public. Maloney said the timing of that trade raised questions of whether Stumpf put himself ahead of customers who had been defrauded, and ahead of the bank in general.
“The timing is very, very suspicious and it raises serious questions,” Maloney said.
Stumpf denied that he had done anything wrong. He said he sold stock with proper approvals and claimed the sales were made “with no view about what was going on.”
It was the first time that Stumpf’s own stock sales have become an issue in the phony account scandal. Last week, Sen. Elizabeth Warren (D-MA) claimed that Stumpf had personally made $200 million off the phony account fraud, which appears to have been tied to the bank’s aggressive cross-selling goals. But Warren didn’t allege any instance of insider trading, just that the value of Stumpf’s shares had risen during the time of the fraud.
According to Bloomberg data, Stumpf sold 300,000 shares of Wells Fargo stock on October 2013. Last week, in Senate hearing, Stumpf said that he first learned about the fraud in late 2013, but wasn’t clear about exactly when. He implied that he learned about it in the run up to the release of a Los Angeles Times article detailing the problems at Wells Fargo. The article, titled, “Wells Fargo’s pressure-cooker sales culture comes at a cost,” came out on December 21, 2013.
The article does not say how long the reporters were working on it, but does say it was based on 28 interviews and a through review of documents. One unnamed sales manager is quoted as saying, “It’s all manipulation. We are taught exactly how to sell multiple accounts. It sounds good, but in reality it doesn’t benefit most customers…CONTINUE READING