Wells Fargo Independent Board Furious About CEO Stumpf’s Handling Of Scandal

Wells Fargo Chief Executive John Stumpf’s move to give up around $41 million in unvested equity was prompted in part by board members who were furious about how the CEO handled the fake account scandal.

According to a report by CNBC, citing sources, the independent members of Wells Fargo board are “furious” with Stumpf’s handling of the scandal that resulted in a $185 million fine from the Consumer Financial Protection Bureau and a trip to Capitol Hill to testify in front of Congress. The report said board members felt they weren’t informed about what was going on. The CEO’s supporters disagree, arguing the board was given enough of a heads-up about what was going down.

A Wells Fargo spokesperson issued an email statement to CNBC, saying: “The company fully supports the decision of the independent directors of the board regarding executive accountability and the initiation of an independent investigation of our retail banking sales practices. Our management team will cooperate fully and is dedicated to strengthening our culture and taking strong actions to ensure this conduct does not happen again.”

The unhappiness on the part of the board isn’t too much of a surprise, given The Wall Street Journal reported earlier in the week that Wells Fargo‘s board has hired Shearman & Sterling to advise on whether it should attempt to claw back executive compensation from CEO John Stumpf, COO Tim Sloan and former retail banking chief Carrie Tolstedt. The Consumer Financial Protection Bureau fined Wells Fargo $185 million earlier this month in the largest fine levied from the government agency. It also ordered Wells Fargo to refund $5 million in fees that the bank wrongly charged customers. According to an investigation by the CFPB, Wells Fargo employees not only made fake deposit accounts but also submitted 565,443 unauthorized credit card account applications on behalf of unknowing customers. It’s estimated that 14,000 of those accounts accrued $403,145 in fees. Through its own independent investigation, the bank discovered a total of $2.6 million in unauthorized fees.

That wasn’t the only bad news for Wells Fargo. Bloomberg reported California, which is the country’s largest issuer of municipal bonds, is prohibiting Wells Fargo from underwriting any of the state bonds and from handling its banking transactions.

California’s move is effective immediately and will stay in place for 12 months, Bloomberg reported. The ban will become permanent if the bank does not change its sales practices, State Treasurer John Chiang said at a press conference covered by Bloomberg. The state is also refusing to add to its existing investments in Wells Fargo securities and already replaced the beleaguered bank with Loop Capital for two muni deals that total around $527 million and will be sold next week.

“Wells Fargo’s venal abuse of its customers by secretly opening unauthorized, illegal accounts illegally extracted millions of dollars between 2011 and 2015,” Chiang said in a news conference in San Francisco. “This behavior cannot be tolerated and must be denounced publicly in the strongest terms.”