Wells Fargo execs said to get OCC letters before leave

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Two Wells Fargo executives were placed on leave and removed from the firm’s operating committee after they received letters from the Office of the Comptroller of the Currency, according to a person familiar with the matter.

The leaves of absence for Hope Hardison, the chief administrative officer, and chief auditor David Julian are not related to the bank’s reported results, San Francisco-based Wells Fargo said Wednesday.

The letters, known as 15-day letters, are the agency’s way of saying it intends to pursue sanctions against the recipient. The person who receives the letter gets 15 days to respond to the accusations, and sanctions against individuals can include fines and temporary or permanent barring from the banking industry.

Wells Fargo said some executives under the two will now report directly to Chief Executive Tim Sloan. The bank is still grappling with management fallout from a fake-accounts scandal that erupted more than two years ago. This week, it paid $65 million to New York state regulators over the issue and still faces a bevy of related lawsuits and regulatory probes.

With Wednesday’s change, just three of the 10 members of Wells Fargo’s operating committee as of February 2016 remain there today: Sloan, Chief Financial Officer John Shrewsberry and Avid Modjtabai, who leads the bank’s tech-payments division. Carrie Tolstedt, who led the community bank where the fake-accounts scandal took place, and then-CEO John Stumpf both left the firm in 2016.

Wells Fargo hired Mandy Norton from JPMorgan Chase to be chief risk officer earlier this year. David Galloreese, who joined Wells Fargo in June as head of human resources, will now report directly to Sloan and serve on the operating committee.

Wells Fargo is hiring an executive to oversee information security and information technology. This person will also report directly to Sloan and join the operating committee.

“During the past two years, we have become more customer-focused, made significant leadership and board changes, strengthened risk management and controls, simplified the organization, and invested in our team members,” Sloan said in Wednesday’s statement.

Wells Fargo is searching internally and externally for a new chief auditor, and Kimberly Bordner, current executive audit director, will serve as Julian’s replacement in the interim.

Bloomberg News