Employees And Investors Sue Wells Fargo Over Accounts

| by Zach Cohen
Former Wells Fargo CEO John StumpfFormer Wells Fargo CEO John Stumpf

Former Wells Fargo employees filed a lawsuit on Sept. 26, alleging they were fired after refusing to open bogus accounts in a scheme designed to artificially inflate the bank's stock price. 

The suit claims employees had to "choose between keeping their jobs and opening unauthorized accounts," reports CNN Money. The lawsuit was opened by two California employees the week of Sept. 19, and was joined by six more nationwide employees on Sept. 26. The federal suit alleges wrongful termination, among other claims, and is seeking $7.2 billion or more in damages.

Many more are likely to join the lawsuit. Jonathan Delshad, the attorney representing the former workers, said, "We're being inundated with emails. Every minute there's new people, new stories and new allegations."

Wells Fargo denies the employees' accusations, and said, in a statement, "We disagree with the allegations in the complaint and will vigorously defend against the misrepresentations it contains."

A separate lawsuit, brought by Wells Fargo shareholders on Sept. 26, alleges the bank misled investors about the success of its sales, reports Reuters. CEO John Stumpf and former executive Carrie Tolstedt are singled out for selling $31 million in stock at inflated prices. 

On Sept. 20, Stumpf appeared before the Senate Banking Committee, where Sen. Elizabeth Warren of Massachusetts gave him a strongly worded admonition: "When it all blew up, you kept your job, you kept your multi-multimillion dollar bonuses, and you went on television to blame thousands of $12-an-hour employees who were just trying to meet cross-sell quotas that made you rich."

Labor Secretary Tom Perez announced a "top-to-bottom" probe of the practices that led to the employee lawsuit, in response to a request by eight Democrats in the Senate to investigate, according to NBC. 

A five-person human resources committee from the Wells Fargo board of directors will decide whether to rescind, or "clawback" some of the money that Stumpf and Tolstedt made in the scheme, according to USA Today. Clawbacks can apply to bonuses, incentive pay or shares issued for performance. Each of these clawbacks is triggered by different types of misconduct, and the human resources committee will be responsible for determining the clawbacks appropriate for each executive. 

Sources: CNN Money, NPR, NBC News, Reuters via NBC News, USA Today / Photo credit: Fortune Global Forum/Flickr

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