Wells Fargo’s former top lawyer settles fake account charges for $3.5 million
James Strother, the former general counsel of Wells Fargo, agreed to a $3.5 million fine with federal regulators on Friday for his role in the bank’s fake-accounts scandal.
Strother was the top lawyer at the bank from 2004 to 2017, when the bulk of the bank’s fake-account creation took place.
The Office of the Comptroller of the Currency, Wells Fargo’s top federal banking regulator, alleged when it initially charged him in January that Strother, as head of the bank’s legal department, failed to address Wells Fargo’s sales misconduct.
“Despite his and the Law Department’s knowledge of the problem, Respondent Strother took no meaningful action to correct the sales practices misconduct problem,” the OCC said in January.
The fake accounts were illegal, Strother knew they were illegal, and his legal department allowed and enabled the activity to persist, regulators said. He was accused of unsafe or unsound practices and breaching his fiduciary duty.
As a condition of Friday’s settlement, Strother agreed to cooperate in future investigations in the sales practices at the bank.
“Strother is an honorable man who dedicated over 30 years in the service of Wells Fargo,” said Walt Brown, Strother’s lawyer. “He retired in 2017, and is pleased to put this matter behind him.”
Wells Fargo declined to comment on Strother’s settlement. Bank spokesman Mark Folk referred to a statement the bank gave when Strother was initially charged last January, in which CEO Charlie Scharf called the actions of former executives “inexcusable.”
Strother joined Wells Fargo predecessor Norwest in 1986, and was integral in the bank’s many mergers. As general counsel, he played a major role in the 2008 purchase of Charlotte-based Wachovia.
Sales scandal
Over more than a decade, hundreds of thousands of Wells Fargo employees opened millions of fake accounts in customers names, among other misconduct, in a scandal that rocked the banking world.
At least 11 former bank executives have been charged by or settled with regulators for the sales scandal, including former CEO John Stumpf, who was banned from banking in February last year.
In September, three former regulators, who regulators said knew or should have known about the systemic misconduct going on inside the bank, settled with the OCC. The Securities and Exchange Commission also accused former Wells Fargo executives of misleading investors in November.
Strother was initially charged by the OCC for his role in January 2020. Regulators sought a $5 million fine from Strother. At the time, his lawyer said the charges were “false and unfounded, and he intends to vigorously defend against them.”
Wells Fargo is still recovering financially from the scandal, and still operates under a growth cap that the Federal Reserve put on the bank in 2018 as a punishment. Scharf, the CEO, declined to say how much longer the cap would be in place on a Friday earnings call.
