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Wells Fargo CEO Grilled By Congress, Denies Fraud by Management

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Tuesday wasn’t a great day for Wells Fargo (WFC - Free Report) CEO John Stumpf, the man whose company is at the center of a scandal involving fraudulent account-opening practices. The banking chief was called to a Congressional committee hearing to answer questions about the company’s fraud, and several key U.S. senators held nothing back while grilling Stumpf.

Stumpf’s most vocal critic was Elizabeth Warren, the senior senator from Massachusetts. The Democratic senator questioned Stumpf’s accountability, demanded his resignation, and suggested that he be criminally investigated.

“Since this massive years-long scam came to light, you have said repeatedly: ‘I’m accountable.’ But what have you actually done to hold yourself accountable? Have you resigned as CEO or chairman of Wells Fargo?,” Warren asked.

The exchange between Warren and Strumpf reached its most tense point when Senator Warren brought up the chief executive’s stock-based compensation during the years that the Wells Fargo fraud occurred.

“While this scam was going on, you personally held an average of 6.75 million shares of Wells stock. The share price during this time period went up by about $30, which comes out to more than $200 million in gains, all for you personally,” Warren said after a round of contentious back and forth questioning.

Other members of the committee were also unimpressed with Stumpf’s prepared remarks, despite his attempt to place some of the blame on himself. Although Stumpf did apologize to Wells Fargo’s customers and employees, as well as the American public, he fell short of labeling the scandal a result of systemic fraud.

“I do want to make very clear that there was no orchestrated effort, or scheme as some have called it, by the company,” he claimed.

Stumpf also argued that the fake accounts cost the bank money and customers. The company also said that it has fired 5,300 employees in response to the issue, which began in 2011, including “managers and managers of managers.”

Today’s committee hearing will certainly not be the last time Stumpf or Wells Fargo will face a tough series of questions in front of regulators and the American public.

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