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Former Wells Fargo chief executive Tim Sloan, who led the bank’s early efforts to address a burgeoning fake accounts scandal, has sued the lender for more than $34mn over its decision to cancel stock grants after he stepped down.
Sloan, who worked at Wells for more than 30 years, was promoted to chief operating officer and then served as CEO from 2016 to 2019 as the bank grappled with a multiplying set of risk and compliance problems. His efforts to rebuild trust foundered at a March 2019 congressional hearing where his testimony prompted politicians to call for his dismissal.
He announced his departure days later, after a rare public rebuke from the Office of the Comptroller of the Currency, which said it was “disappointed” in the bank’s progress.
The lawsuit filed in state court in San Francisco contended that Sloan “bore the brunt of public criticism, much of it directed at Wells Fargo policies and practices that predated his tenure as COO or CEO and which he was working assiduously to correct.”
It said Sloan opted not to negotiate a severance agreement “in a spirit of mutual trust” and that Wells had “reneged” on verbal promises to pay out his long-term grants “in the face of public pressure from elected officials”.
“To this day, Wells Fargo has failed to identify anything Mr Sloan did or failed to do that would justify its decision,” the lawsuit said. It seeks the restoration of the cancelled stock awards as well as punitive damages and compensation for emotional distress.
Wells Fargo said in a statement: “Compensation decisions are based on performance, and we stand behind our decisions in this matter.”
The fake accounts scandal was centred in the bank’s consumer division rather than the wholesale lending division where Sloan spent most of his career. Federal regulators brought enforcement cases against the bank, John Stumpf, the chief executive who preceded Sloan, and several other Wells executives, but not Sloan himself.
Wells still operates under a Federal Reserve order that caps its assets because of lingering regulatory concerns.
Sloan joined the investment firm Fortress as a senior adviser in 2020.