The Securities and Change Fee on Friay accused former Wells Fargo executives John Stumpf and Carrie Tolstedt with deceptive buyers, the newest consequence of the financial institution’s gross sales scandal.

Stumpf and Tolstedt made statements that duped buyers and the general public to the worth of Wells Fargo inventory, the SEC mentioned. Stumpf paid a $2.5 million positive to resolve the fees with out admitting or denying the findings. Tolstedt has not settled with the SEC and her lawyer mentioned Tolstedt plans to clear her identify.

Over greater than a decade, a whole bunch of hundreds of Wells Fargo workers took half in sham gross sales practices, opening tens of millions of pretend accounts in prospects’ names to fulfill unreasonably excessive gross sales objectives.

In February, the financial institution agreed to pay a $three billion positive to federal prosecutors and the SEC for the practices. The financial institution additionally acknowledged within the February settlement that Wells Fargo administration knew about what was occurring, turned a blind eye to the practices and minimized the difficulty to the corporate’s board.

Tolstedt, as head of the retail banking division the place a lot of the misconduct occurred, has been probably the most closely focused by prosecutors and regulators. She was a high booster of the “cross-sell” metric — mainly, growing the variety of accounts and merchandise that prospects had on the financial institution.

Boosting the variety of merchandise {that a} buyer has with a financial institution is a standard observe throughout the business. However at Wells Fargo, the variety of merchandise bankers have been instructed to promote to prospects weren’t affordable, and administration knew it, regulators mentioned earlier this 12 months. That induced hundreds of workers to interact in what ended up amounting to widespread financial institution fraud, creating tens of millions of pretend accounts and merchandise in prospects’ names with out their consent, prosecutors and regulators have discovered.

The SEC’s position

In Friday’s transfer, the SEC, which regulates the financial institution’s inventory, took subject with Tolstedt’s endorsement of Wells Fargo’s cross-sell metric as a measure of the financial institution’s monetary success. The federal company mentioned that Tolstedt misled buyers and the general public in statements as a result of, partially, the metric was inflated by accounts and companies that have been unused, unneeded, or unauthorized. Tolstedt “knew or was reckless in not figuring out” that her statements have been “materially false and deceptive,” the SEC mentioned.

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Enu Mainigi, a lawyer for Tolstedt, mentioned in a press release that it was “unfair and unfounded for the SEC to level the finger at Ms. Tolstedt when her statements weren’t solely true but in addition totally vetted by others as a part of Wells Fargo’s insurance policies, procedures and programs of controls.

“Ms. Tolstedt acted appropriately, transparently and in good religion always,” Mainigi mentioned. “We sit up for setting the report straight and clearing her identify.” Tolstedt retired from Wells Fargo in 2016.

The Workplace of the Comptroller of the Forex, Wells Fargo’s federal regulator, is making an attempt to ban Tolstedt from banking and positive her $25 million. She is combating the trouble.

Stumpf, who served because the financial institution’s CEO from 2007-16, “realized of information that put, or ought to have put, him on discover about materials inaccuracies,” within the financial institution’s financials, the SEC mentioned Friday. He has already been banned from the banking business by the OCC.

“If executives talk about a key efficiency metric to advertise their enterprise, they have to achieve this absolutely and precisely,” Stephanie Avakian, the SEC’s enforcement head, mentioned in a press release. Richard Strassberg, a lawyer for Stumpf, declined to remark.

Peter Gilchrist, a Wells Fargo spokesman, declined to touch upon Friday’s announcement. A January message from CEO Charlie Scharf known as the financial institution’s previous actions “inexcusable” and that whereas the financial institution is “totally different at this time,” that “we all know we nonetheless have vital work to do to regain the belief of all stakeholders.”

Three different former Wells Fargo executives have been fined by the financial institution’s regulator in September. The executives have been all key lieutenants underneath Tolstedt.