Close
ThinkAdvisor

Practice Management > Building Your Business

Ex-Wells Fargo Exec to Pay $3.5M for Role in Fake Accounts Scandal

X
Your article was successfully shared with the contacts you provided.
James Strother, former general counsel for Wells Fargo Bank (Photo: Wells Fargo)

The Office of the Comptroller of the Currency has slapped former Wells Fargo & Co. general counsel James Strother with a $3.5 million penalty for his alleged role in the bank’s phony checking and savings account scandal. 

Strother agreed to pay the civil money penalty to the U.S. Treasury as part of a settlement that also includes a personal cease-and-desist order. The order requires Strother to cooperate with the OCC in any investigation, litigation or administrative proceeding related to Wells Fargo’s alleged sales practices misconduct. 

Strother’s attorney, Walt Brown of Orrick, Herrington & Sutcliffe, stated previously that the allegations against his client were “false and unfounded, and he intends to vigorously defend against them.”

Brown stated Friday in an email, “Jim Strother is an honorable man who dedicated over 30 years in the service of Wells Fargo. He retired in 2017, and is pleased to put this matter behind him.”

In response to a request for comment on Strother’s settlement, a Wells Fargo spokeswoman provided a January 2020 statement in which the bank described the misconduct in question as “inexcusable.”

The OCC, which initially sought a $5 million penalty from Storther, declined to discuss the negotiated settlement. 

The OCC alleged in a charging document that Strother admitted in sworn testimony that the bank had a “systemic sales practices misconduct problem rooted in the community bank’s business model,” referring to Wells Fargo’s retail branch network, its largest line of business.  

See: A Timeline of Wells Fargo’s Scandals

Details on the Fake Accounts

Under immense pressure to achieve “intentionally unreasonable sales goals,” Wells Fargo employees created millions of fraudulent checking and savings accounts for the bank’s clients without their consent, according to the OCC.

The scam allegedly began in 2002 and continued for the next 14 years, when a former branch manager came forward as a whistleblower

“Respondent Strother and the law department he supervised were aware of the longstanding sales practices misconduct problem and did nothing meaningful to address it,” the OCC alleged. “Instead, respondent Strother and the law department were instrumental in maintaining the community bank’s business model that resulted in rampant criminal and legal violations.” 

Strother stepped down amid a federal investigation into the phony accounts. He is among several former bank executives who have reached settlements in the case, including Strother’s former boss, ex-Wells Fargo CEO John Stumpf. He agreed to pay $17.5 million and to be barred from working in the banking industry. 

Last year, Wells Fargo’s new CEO, Charles Scharf, told a congressional panel that the bank had added 3,300 compliance staffers and created a new chief operation officer position to oversee the compliance work, which now operates independently of the bank’s business units. 

Read more: Wells Fargo to Pay $3B Over Fake Accounts

 

 

More on this topic