Former Wells Fargo CEO charged by SEC for role in misleading investors

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The Securities and Exchange Commission said Friday that it filed charges against former Wells Fargo & Co. Chief Executive John Stumpf and former head of the bank’s Community Bank Carrie Tolstedt for their roles in allegedly misleading investors about success of the core business. The filings include settled charges against Stumpf, who agreed to pay a $2.5 million penalty, and litigation alleging Tolstedt committed fraud. The SEC’s order against Stumpf, who announced his retirement in October 2016 amid a sales practice scandal, finds that in 2015 and 2016, Stumpf signed and certified statements filed with the SEC, which he should have known were misleading, regarding both Wells Fargo’s Community Bank cross-sell strategy and its reported metric. “If executives speak about a key performance metric to promote their business, they must do so fully and accurately,” said Stephanie Avakian, director of the SEC’s Division of Enforcement. “The Commission will continue to hold responsible not only the senior executives who make false and misleading statements but also those who certify to the accuracy of misleading statements despite warnings to the contrary.” Wells Fargo’s stock rose 0.6% in premarket trading. The stock has tumbled 55.7% year to date through Thursday, while the SPDR Financial Select Sector ETF has lost 13.6% and the S&P 500 has gained 9.5%.
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