Ex-Wells Fargo exec fights SEC on fake accounts

A former top executive at Wells Fargo & Co. at the center of the bank’s fake accounts scandal is asserting her constitutional right against self-incrimination to push back against claims by the Securities Exchange Commission that she misled investors. 

Carrie Tolstedt, who was a senior vice president before she left the bank in 2016, cited her right under the Fifth Amendment not to be a witness against herself more than 100 times in a response filed Friday to the agency’s complaint. She noted that the Supreme Court has called the Fifth Amendment a right to “protect the innocent.”

Tolstedt’s paragraph-by-paragraph response to the SEC’s November complaint accuses the agency of mischaracterizing her statements and bank filings on more than 20 specific points. She also denies that she was living in San Francisco when the agency sued her there.

Former Wells Fargo & Co. Chief Executive John Stumpf has settled the agency’s claims against him and the company agreed last year to pay $3 billion to settle U.S. investigations into more than a decade of widespread consumer abuses under a deal that lets the scandal-ridden bank avoid criminal charges.

Among the allegations to which Tolstedt invoked her right not to provide a response was that she and other executives were told in a banker’s 2014 resignation email of “rampant practices to manipulate” customer account volumes. 

Enu Mainigi, one of Tolstedt’s lawyers, had no immediate comment, and an SEC attorney leading the case didn’t immediately respond to a request for comment. Mainigi has previously said the former executive “acted appropriately, transparently and in good faith at all times.”

The SEC alleges in the case that Tolstedt made statements claiming the bank’s strategy was to sell existing customers new products they needed, wanted and used, when it was really pushing unneeded and unwanted products and opening unauthorized accounts. Her request for dismissal of one of the agency’s four claims was denied in June. 

Tolstedt also asserted her Fifth Amendment rights in an enforcement action brought last year by the Office of the Comptroller of the Currency.  

The case is SEC v. Tolstedt, 4:20-cv-07987, U.S. District of California, Northern District of California (Oakland).