In a legal tussle that echoes the aftermath of Wells Fargo’s notorious consumer abuses scandal, the bank faces a $34 million lawsuit filed by its ex-CEO, Tim Sloan. The lawsuit, lodged in a California state court, alleges the financial giant reneged on commitments, canceling stock awards and withholding a rightful bonus following Sloan’s resignation in 2019.
Sloan, at the helm of Wells Fargo from 2016 to 2019, found himself entangled in the fallout of the sales practices scandal, ultimately becoming the second CEO to step down amidst allegations of unauthorized consumer account openings. The lawsuit contends that Wells Fargo, in a post-resignation move, unfairly held back compensation owed to Sloan, citing a performance-based rationale.
Wells Fargo responded with a terse statement, asserting that their compensation decisions align with performance metrics, and they stand by the choices made in Sloan’s case.
The scandal itself saw Wells Fargo shelling out $3 billion in 2020 to settle criminal and civil investigations into claims of unauthorized accounts. Subsequently, an additional $1 billion was paid out this year to settle a shareholder lawsuit. The bank acknowledged pressuring employees between 2002 and 2016 to meet unrealistic sales goals, leading to the creation of fraudulent accounts.
Sloan, distancing himself from culpability for the scandal, claims to have been unfairly scapegoated by the board of directors, resulting in his forced resignation. His legal team, in the filed complaint, emphasized Wells Fargo’s failure to pinpoint any wrongdoing on Sloan’s part.
The former CEO’s departure was framed as a voluntary decision at the time, with Sloan stating that the increasing focus on him hindered the bank’s progress.
Sloan’s lawsuit alleges breach of contract, seeking not only the withheld $34 million but also unspecified damages for emotional distress and punitive damages. Representing him is David Lowe, a San Francisco-based lawyer known for handling high-profile employment cases, including those involving Tesla and Pinterest. Lowe’s track record includes successfully representing former Pinterest COO Francoise Brougher in a sex discrimination case settled for $22.5 million in 2020.
As legal battles unfold, the repercussions of Wells Fargo’s turbulent past continue to reverberate, with Sloan emerging as a central figure in a quest for financial retribution and vindication.
