Wells Fargo & Co has fired a senior vice president after investigating reports she held lavish parties at a foreclosed beachfront Malibu house owned by the bank.
The fourth-largest U.S. bank said in a statement on Monday that it had terminated one employee, senior vice president Cheronda Guyton, who it found had violated its policies.
We deeply regret the activities that have taken place as they do not reflect the conduct we expect of our team members, the bank said in the statement.
Wells Fargo, which received $25 billion in government bailout money last October, was criticized earlier this year for planning events at upscale Las Vegas hotels for top mortgage employees. It said in February that it did not plan any more of these recognition events this year. It said at the time that such events were part of its culture, and that it believes in rewarding hard-working team members.
Guyton, who had been responsible for Wells Fargo's foreclosed commercial properties, used the 3,800-square-foot beachfront house on Malibu Colony Drive on weekends for parties, one of which had guests arriving on a yacht, the Los Angeles Times reported, citing neighbors.
The previous owners of the house -- which sits in the same California community as that of movie star Tom Hanks -- had purchased it for $12 million, but lost a fortune to convicted swindler Bernie Madoff's massive Ponzi scheme, the Times reported, citing a real estate agent.
Malibu Mayor Andy Stern told Reuters that he appreciated the fact that Wells Fargo took the issue seriously.
They seem to have done a rapid and thorough investigation. I respect that they did that, Stern said.
Any kind of corporate misbehavior affects the institution and the industry, said Sandra Chrystal, who teaches business ethics and communications at University of Southern California. Chrystal said a company committee likely made the decision to let Guyton go.
If anything the corporate culture is now more sensitive to issues like this because of the financial problems and impression that anyone in the financial industry is wealthy or having a good time at the expense of the common public, Chrystal said.
A resident in the enclave told Reuters on Sunday that Guyton had parties but that they weren't excessive.
It's shocking what she did. I really question her judgment. How many other bank executives would make a decision like that? said the resident, who asked not to be identified.
Wells Fargo, which acquired troubled bank Wachovia Corp at year end, said last week that it had taken possession of the Southern California property in May and withheld it from the market for an agreed-upon period of time. It said its policy prohibited personal use of properties held by the bank.
Wells Fargo said earlier this month that it would repay its bailout funds without raising additional capital, but did not give a timeframe. Other large banks including JPMorgan Chase & Co , Goldman Sachs Group and Morgan Stanley repaid money from the government's Troubled Asset Relief Plan in June.
Shares in the bank closed on Monday up 1.8 percent at $27.92.
(Additional reporting by Lisa Baertlein and Gabriel Madway; Editing by Toni Reinhold, Gary Hill)