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Treasurer Magaziner: Wells Fargo Agrees to Investor Demands for Transparency and Accountability on Corporate Culture that Encouraged Massive Fraud

In response to investor demands, Wells Fargo will publish a report on the root causes of unethical and illegal behavior at the bank and its impact on customers and investors; along with and a detailed plan for corrective action going forward.

"Investors and customers deserve information on the culture at Wells Fargo which allowed systemic fraud to occur over years, and what the Bank is doing to ensure ethical behavior throughout its lines of business," said Treasurer Magaziner. "By engaging with investors, and subsequently agreeing to publish a comprehensive business review, the company is taking incremental steps toward reform and re-establishing trust with stakeholders."

Over the past two years Treasurer Magaziner has co-filed shareholder proposals requesting that Wells Fargo publish a comprehensive business standards review. During a meeting with Wells Fargo CEO Timothy Sloan in February 2017, Treasurer Magaziner expressed his concern with the corporate culture that allowed widespread fraud. The shareholder proposal was originally filed in 2014 by The Sisters of St. Francis of Philadelphia.

Wells Fargo has agreed that the Business Standards Review will include the following six elements:

Analysis of the impacts on the bank, its reputation, customers, and investors of the continuing scandals;

Identification of the systemic cultural and ethical root causes of recent scandals, including at the board level;

A framework to address the issues and embed systems throughout the company, including changes already implemented, establishment of grievance mechanisms, and plans to strengthen corporate culture and instill a commitment to high ethical standards at all employee levels;

Key performance indicators to evaluate the effectiveness of changes instituted over time;

A commitment to ongoing and regular disclosure of progress;

Description of how the identified issues will be factored into employee and executive incentive and compensation decisions.

In response to Wells Fargo's commitment to publishing the review, investors have agreed to withdraw their proposal.

"With each new scandal and penalty as a result of aggressive cross-selling, car loan insurance issues, and mortgage fraud, investors tried to impress upon Wells Fargo management the need for a comprehensive review that will lead to systemic change. We are encouraged that they are finally agreeing to take this first step toward what we hope will be authentic reform," said Sr. Nora Nash of the Sisters of St. Francis of Philadelphia, who led the coalition of investors which includes members of the Interfaith Center on Corporate Responsibility, as well as Connecticut State Treasurer Denise Nappier.

Investors will remain in regular dialogue with Wells Fargo throughout the internal review process which is expected to end with a report published later this year.

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Contact: Evan England, Director of Communications (401) 222-2240 | (401) 439-2199 (mobile) evan.england@treasury.ri.gov

Related links

  • Department or agency: Office of General Treasurer Seth Magaziner
  • Online: http://treasury.ri.gov
  • Release date: 03-06-2018

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