Yahoo Finance Wells Fargo tells state court why it should toss out $34M lawsuit from former CEO
Wells Fargo wants a California state court to toss out a lawsuit filed by former CEO Timothy Sloan who claims the bank owes him $34 million in compensation.
The San Francisco-based bank, which has its largest employment hub in Charlotte, recently told the court it wanted “the complaint be dismissed in its entirety with prejudice, and that judgment be entered for defendant.” Sloan filed his lawsuit in December.
He retired in 2019 after a massive sales scandal involved employees setting up millions of fake customer accounts to reach sales goals.
Wells Fargo promised him bonuses and multiple stock awards, according to his complaint. But the banking giant claims that Sloan is not entitled to the money, according to its April 9 filing with the Superior Court of California in San Francisco County.
SCAPEGOAT CLAIMS: Ex-Wells Fargo CEO sues bank for $34M
Lawyers for Wells Fargo cited 14 defenses against Sloan’s claims. They mentioned California labor codes, laws and denials of wrongdoing. Any alleged failure to comply with labor codes, which Wells Fargo denies, was done in good faith and with reasonable grounds with understanding that Sloan understood them, according to the bank’s lawyers.
Wells Fargo attorneys said that the bank “timely paid all amounts due to the plaintiff and did not owe any additional amounts.”
In a statement sent to legal news service Law360, Sloan’s attorney David Lowe said they’re confident that evidence will show he handled his role as CEO with professionalism and in the best interests of Wells Fargo’s customers, shareholders and employees.
About the Wells Fargo lawsuit
Sloan claimed in his lawsuit that he was used as a scapegoat for sales practices that led to extensive regulatory penalties and a congressional hearing involving 3.5 million bank and credit card accounts being opened without the permission of customers.
Last May, Wells Fargo indicated in court records it was settling a class-action lawsuit from shareholders for $1 billion over claims the bank misled them about how it was complying with regulators in the scandal’s wakel.
Sloan insisted the problems started before his time as CEO and that he tried to fix them before retiring from Wells Fargo. The bank promoted Sloan to the CEO position in 2016 after John Stumpf resigned in the wake of the scandal.
Stumpf was banned from the banking industry and fined $17.5 million by the Office of the Comptroller of the Currency.
Carrie Tolstedt, former head of Wells Fargo’s consumer bank, also faced a $25 million fine and an industry ban. In September, she was sentenced by a federal judge to three years’ probation, including six months of home confinement, for her role in misleading investors.
Wells Fargo employed Sloan for more than three decades before he retired five years ago. Sloan is also seeking damages for unspecified distress, among other claims for damages.
“Compensation decisions are based on performance, and we stand behind our decisions in this matter,” a Wells Fargo spokeswoman told to The Charlotte Observer.
A trial date has not been set.
About Wells Fargo
Wells Fargo serves 69 million customers in 28 countries and operates in more than 5,500 locations. The financial services company employs over 247,000 people, with about 27,000 workers in Charlotte.
Wells Fargo has faced numerous sanctions and lawsuits since its 2016 fake accounts scandal.
In 2018, Wells Fargo was assessed a $1 billion penalty in a case brought by the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency over auto-lending and mortgage practices.
In 2022, Wells Fargo agreed to pay $3.7 billion in fines and restitution in a settlement with the CFPB to fix issues related to auto lending, mortgages and consumer deposit accounts.
Wells Fargo is currently facing a lawsuit in federal court in North Carolina claiming the bank overcharged thousands of American soldiers and their families for credit card interest rates and fees.
Correction: The headline has been updated to reflect the filing was made in state court. And the second paragraph of the story was updated to further clarify what Wells Fargo said in its court filing.
