Wells Fargo was slammed by the Federal Reserve Bank by issuing (publicly) an enforcement action. The action by the Federal Reserve Board effectively ordered Wells Fargo to replace four board members. It also stopped the bank from increasing its total assets.
The Federal Reserve also publicly censured the bank’s board of directors, a former lead independent director, and the bank’s former Chairman and CEO.
This is a significant action by the Feds, in that it not only publicly censured board members and the former head of the bank, but restricts the banks growth by imposing strict limits.
The significant Federal action follows on the ruling by Judge Jon S. Tigar of the San Francisco U.S. District Court (as reported in our January 17, 2018 Elert) who allowed the plaintiffs case against 15 former Wells Fargo Directors and 4 officers, current or former, to go forward. This legal ruling and the comment by Judge Tigar plus this Federal Reserve action certainly increases the risk profile of these defendants.
The outcome of the trial is important, for all publicly traded companies and their directors. It could have major implications.