Sept 15 (Reuters) – The former head of Wells Fargo’s (WFC.N) retail bank on Friday avoided prison time after pleading guilty to an obstruction charge related to the bank’s sweeping fake-accounts scandal.
Carrie Tolstedt was sentenced to three years of probation including six months of home confinement by U.S. District Judge Josephine Staton in Los Angeles. She will also pay a $100,000 fine and serve 120 hours of community service.
Tolstedt, 63, pleaded guilty in March to obstructing a government probe into misconduct at San Francisco-based Wells Fargo’s retail and small business lending business, which she led from 2007 to 2016.
She is the only top executive to face criminal charges over revelations starting in 2016 about Wells Fargo’s sales culture, where employees opened millions of accounts and sold products that customers did not want in order to meet unrealistic sales goals.
Tolstedt is also the rare top executive at a major U.S. bank to have faced potential time behind bars. None went to prison as a result of the 2008 global financial crisis.
Prosecutors had sought a one-year prison term. The actual sentence mirrored Tolstedt’s request, and she accepted “full responsibility” for her crime.
A lawyer for Tolstedt declined to comment. The office of U.S. Attorney Martin Estrada in Los Angeles had no immediate comment.
Wells Fargo paid $3 billion in 2020 to settle federal criminal and civil probes into its sales practices, admitting it pressured employees over 15 years to sell more products, known as cross-selling.
The scandal also toppled former Chief Executive John Stumpf, who in 2020 paid a $17.5 million civil fine and accepted a lifetime industry ban, and led the Federal Reserve in 2018 to cap Wells Fargo’s assets, limiting the bank’s growth.
That cap remains in place, though Wells Fargo remains the fourth-largest U.S. bank.
Once called the “best banker in America” by Stumpf, Tolstedt also accepted an industry ban and agreed to pay $20 million in civil fines to resolve charges by the Office of the Comptroller of the Currency and the Securities and Exchange Commission.
Wells Fargo has also clawed back tens of millions of dollars of her pay.
Reporting by Chris Prentice and Jonathan Stempel in New York, and Jaiveer Singh Shekhawat in Bengaluru
Editing by Shounak Dasgupta and Matthew Lewis
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Chris Prentice
Thomson Reuters
Chris Prentice reports on financial crimes, with a focus on securities enforcement matters. She previously covered commodities markets and trade policy. She has received awards for her work from the Society for Advancing Business Editing and Writing and the Newswomen’s Club of New York.
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