Current and former Wells Fargo employees in California are suing the bank for $2.6 billion saying they were the “biggest victims” of the scheme to open accounts without customer approval.
As many as 1.5 million deposit accounts were opened without authorization.
The nation’s third largest bank was hit with a $100 million penalty by the Consumer Financial Protection Bureau Sept. 8 for fraudulently opening deposit and credit card accounts. The Office of the Comptroller of the Currency imposed a $35 million fine, and Los Angeles City Attorney Mike Feuer reached a $50 million settlement with the bank.
“Wells Fargo knew that their unreasonable quotas were driving these unethical behaviors that were used to fraudulently increase their stock price and benefit the CEO at the expense of the low-level employees,” the lawsuit charges. “Although this policy was known to top executives of defendants, plaintiffs, as bankers, were blamed for harm to clients and retaliated against."
Some 5,300 employees, most earning just $12 an hour, have been fired. None of the bank’s executives has been penalized, and in congressional testimony last week, Wells Fargo CEO John Stumpf indicated there were no plans to claw back huge bonuses paid to executives based on the fruits of the fraud.
Courthouse News Service reports bank employees filed a class action suit in Los Angeles Thursday, accusing the bank of imposing strict quotas on employees and pressuring workers to boost eight banking products — whether customers wanted them or not. Employees were pushed to create at least 10 new fee-generating accounts a day.
“The biggest victims of this scheme are a class of people that nobody else has talked about. The biggest victims of Wells Fargo's scam is the class of victims that were fired because they did not meet these cross-sell quotas by engaging in the fraudulent scam that would line the CEO's pockets,” the 26-page lawsuit charges. “The good employees with a conscience who tried to meet the sales quotas without engaging in fraudulent scams are the biggest victims of this scam. They are the employees that this lawsuit seeks to redress.”
Bloomberg said the suit, filed by Alexander Polonsky and Brian Zaghi, seeks class-action status covering California employees who were fired or demoted in the last decade. It accused the company of wrongful termination, retaliation, unlawful business practices and failure to pay wages.
The bank also faces suits by customers in federal court in Utah and investors in state court in San Francisco. The investors accuse Wells Fargo of breaching its duty to investors and demands compensation paid to community banking unit head Carrie Tolstedt be clawed back.
During a Senate Banking Committee hearing last week, Sen. Elizabeth Warren, D-Mass., told Stumpf to resign or face criminal investigation.
"Okay, so you haven't resigned, you haven't returned a single nickel of your personal earnings, you haven't fired a single senior executive," Warren said to Stumpf on Tuesday. "Instead, evidently, your definition of 'accountable' is to push the blame to your low-level employees who don't have the money for a fancy PR firm to defend themselves."