Two former employees of Wells Fargo filed a class action lawsuit in California Thursday, seeking $2.6 billion for workers who were fired or demoted after refusing to commit fraud to boost sales quotas. "Wells Fargo fired or demoted employees who failed to meet unrealistic quotas while at the same time providing promotions to employees who met these quotas by opening fraudulent accounts," the lawsuit read.
On Tuesday, Wells Fargo CEO John Stumpf was castigated and called on to resign by Sen. Elizabeth Warren during a testy appearance before the Senate Banking Committee.
"You squeezed your employees to the breaking point, so they would cheat customers and you could drive up the value of your stock and put hundreds of millions of dollars in your own pocket," Warren said. "And when it all blew up, you kept your job, you kept your multimillion-dollar bonuses, and you went on television to blame thousands of $12-an-hour employees who were just trying to meet cross-sell quotas that made you rich." She went on to call for the Department of Justice and Securities and Exchange Commission to investigate Stumpf and Wells Fargo for criminal activity. Stumpf was the first major financial CEO to be called by the Senate Finance Committee since JP Morgan Chase CEO Jamie Dimon in 2012, who was called to answer for the "London whale" trading loss.
Wells Fargo has fired over 5,300 low-level employees and branch managers for committing the fraud, which involved creating bank accounts for existing clients that the clients had not asked for. The fraud, which was discovered by the Consumer Financial Protection Bureau—formerly headed by Warren—lead to the bank paying $185 million in government penalties (without admitting wrongdoing) and $5 million to affected customers. Wells Fargo CFO John Shrewsberry also told Bloomberg News the bank had already refunded some $2.6 million to the affected customers, which comes out to about $25 per account.
Sam Stecklow is the Weekend Editor for Fusion.