Nov. 14 (UPI) -- The U.S. Securities and Exchange Commission has charged two ex-Wells Fargo executives for allegedly misleading investors in selling strategies.
Former Wells Fargo CEO and Chairman John Stumpf, and former head of Wells Fargo's Community Bank, Carrie Tolstedt, were charged Friday, a SEC statement said.
Stumpf has agreed to pay a $2.5 million penalty in a settlement, according to SEC filings, and the action accusing Tolstedt of commiting fraud is being litigated.
Tolstedt publicly referred to Wells Fargo's "cross-sell metric" as a measure of the company's success despite the fact that "unused, unneeded, or unauthorized" services inflated the metric from mid-2014 through mid-2016, according to SEC's complaint. She also allegedly signed misleading sub-certifications about the accuracy of public disclosures containing materially false and misleading statements.
Tolstedt's lawyer, Enu Mainigi, described her client as "an honest and conscientious executive," in an emailed statement to CNBC.
"It's unfair and unfounded for the SEC to point the finger at Ms. Tolstedt when her statements were not only true but also thoroughly vetted by others as part of Wells Fargo's policies, procedures and systems of controls," Mainigi said in the statement. "Ms. Tolstedt acted appropriately, transparently and in good faith at all times. We look forward to setting the record straight and clearing her name."
Stumpf signed and certified misleading statements with the SEC in 2015 and 2016 about Well Fargo's Community Bank cross-sell strategy and its cross-sell metric, the SEC order against him found, even though he was made aware that the company was misleading the public about the cross-sell metric.
"If executives speak about a key performance metric to promote their business, they must do so fully and accurately," said SEC's Division of Enforcement Director Stephanie Avakian in a statement. "The Commission will continue to hold responsible not only the senior executives who make false and misleading statements but also those who certify to the accuracy of misleading statements despite warnings to the contrary."
Stumpf lost his job in 2016 after the scandal over the inflated metric and his successor, Tim Sloan, lost his job over the same scandal.
Under the $2.5 million settlement Stumpf agreed to, he doesn't have to admit or deny the charges.
In February, Wells Fargo agreed to pay $3 billion to resolve allegations about "unrealistic" sales goals that led to the creation of millions of fake accounts without customers' knowledge.
The settlement said the company collected millions of dollars it wasn't entitled to, harmed customers' credit ratings, and unlawfully misused customers' sensitive personal information.
The regulator said $500 million from the bank's settlement will be combined with money from Stumpf's penalty to be distributed to investors.