The fine print: portion of an arbitration clause from a Wells Fargo credit card agreement, which binds the customer to arbitrate almost any dispute with the bank and forbids class actions. (Consumer Financial Protection Bureau)
A new study shows just how advantageous arbitration has been for Wells Fargo. Short answer: For the bank, it’s been great.
The study comes from Level Playing Field, an Arizona nonprofit that maintains a database of arbitration awards. The group mined records of 215 cases filed against Wells Fargo in 2009-2016 for its report. Its core finding is that of 48 consumer-initiated arbitration cases that resulted in a financial award, consumers won a documented victory in only seven, collecting a total of $349,549. The bank prevailed in 13 cases, collecting $485,208. Records for the other 28 cases don’t identify a winner, but in those cases Wells Fargo was awarded $519,458 by the arbitrators, while the consumers received only $82,527.
Those figures reflect the “improbable chance that consumers will be compensated wholly or at all” in arbitration, says Matthew Waldron of UC’s Hastings School of Law, who has analyzed statistics of arbitration cases involving Wells Fargo and other banks. The Level Playing Field report notes that plaintiffs prevail in more than 60% in state court contract cases that go to trial, but won only 35% in the Wells Fargo cases — seven out of 20 — in which the victor was identified in the arbitration record. Wells Fargo declined to comment on the report.
An influential proxy advisory firm in a report Friday urged shareholders to vote against 12 of Wells Fargo’s 15 directors over the bank’s sales scandal, the latest blow to the bank’s effort to move past the controversy.
In the report, Institutional Shareholder Services said the 12 members of the board’s audit, risk and human resources committees “failed over a number of years to provide a timely and sufficient risk oversight process that should have mitigated the harmful impact of the unsound retail banking sales practices that occurred from 2011-2016.”
ISS recommended yes votes for the three other board members – new CEO Tim Sloan and newcomers Karen Peetz and Ronald Sargent – at the bank’s annual shareholder meeting April 25 in Florida. Proxy advisory firms such as ISS play an important role in shaping the voting of big institutional investors such as pension funds.
Bank of America shareholders should vote for a proposal to split the CEO and chairman positions at the Charlotte-based bank, a shareholder advisory firm recommended this week.
Institutional Shareholder Services joins Glass Lewis, another major proxy advisory firm, in backing the shareholder proposal that is being voted on at the bank’s April 26 annual meeting.
Brian Moynihan currently holds both titles at the nation’s second-biggest bank by assets. If approved, the board would be able to phase in the policy for the next CEO transition, according to the proposal.
“The company’s size, complexity, and legacy legal and regulatory concerns suggest that shareholders would benefit from the strongest form of board leadership structure in the form of an independent chair,” ISS said in its report dated Thursday.
The Office of the Comptroller of the Currency, the lead regulator for national banks, stripped the examiner, Bradley Linskens, of his supervisory powers within the last two weeks, said three sources, who were not authorized to discuss the matter publicly.
Linskens did not immediately respond to requests for comment. OCC spokesman Bryan Hubbard declined to comment.
Wells Fargo’s board is expected to release a report on Monday detailing what went wrong at the fourth-largest U.S. bank, according to sources familiar with the matter. The bank and its board both declined to comment.
NEW DOCUMENTS OBTAINED by a Federal Reserve watchdog group suggest that the Federal Reserve Bank of Richmond’s board of directors may have known that its president was under federal investigation when the board re-appointed him to a new term.
That president, Jeffrey Lacker, resigned his position this week after acknowledging his role in a leak of nonpublic information about Fed policy to an analyst for hedge fund and asset manager clients. The situation highlights the often cozy relationship between central bankers and Wall Street.
In a carefully worded announcement submitted by his attorney Tuesday, Lacker admitted to an October 2012 phone conversation with Medley Global Advisors analyst Regina Schleiger, where she described Fed deliberations over purchasing $45 billion of U.S. Treasury bonds per month as part of their quantitative easing program. Lacker did not deny this, or report Schleiger’s possession of confidential information to Fed staff. In his statement Lacker said, “I realized that my failure to decline comment on the information could have been taken … as an acknowledgment or confirmation of the information.”