In September, Wells Fargo & Co. agreed to a $185 million regulatory settlement over its fake bank account scandal. Considering the profitability of the bank, some observers have expressed dismay at the affordability of that settlement, arguing that the amount the bank paid was probably less than it raked in by pressuring employees to open unauthorized bank accounts. If that’s the case, what can be done to rein in the megabank’s behavior?
An influential proxy advisor has one suggestion: Vote the rascals out. On April 25, Wells Fargo has its annual meeting. Voting shareholders or their proxies could try to vote out members of the board, and Institutional Shareholder Services recommends they do so. The organization recommends voting out 12 of the 15 members, including Chairman Stephen Sanger, while retaining current CEO Timothy Sloan who stepped up in October.
Calling the recommendation “extreme and unprecedented” in a statement, Wells Fargo urged shareholders to support the board, which it claims has made reforms. “The Board has already taken numerous actions and supported management’s steps to promote accountability, strengthen oversight, and hold to account those responsible for improper sales practices,” the statement said.
For its part, ISS argues that the 12 members of the board it recommends voting against, along with board committees, have had years “to provide a timely and sufficient risk oversight process” that would prevent wrongdoing on the scale discovered last year, but failed to do so.
Of course, there are those who say that creating as many as 2 million bank accounts without the account holders’ permission, backing those up with fake PINs and email addresses, and then blacklisting the whistleblowers, should be considered “extreme and unprecedented,” as well.