SAN FRANCISCO (CN) — A federal judge Thursday appeared skeptical of Wells Fargo’s claim that its board of directors was unaware of the scope of the phony accounts scandal that already has cost the bank more than $300 million in penalties for the misconduct.
During a hearing on a motion to dismiss a shareholder class action, U.S. District Judge Jon Tigar appeared to reject arguments that a December 2013 article in the Los Angeles Times could not have put the board on notice about the widespread nature of the bank’s bogus accounts scandal.
“I find it very difficult to read this article and conclude the conduct was geographically limited and not about the unauthorized opening of accounts,” Tigar said.
Wells Fargo attorney Brendan Cullen said one could read the article and conclude the problem was limited to Los Angeles and Orange counties, and there was nothing inherently illegal about the company’s practice of encouraging employees to cross-sell multiple products to customers.
Cullen added that even though former CEO and Chairman of the Board John Stumpf discussed the L.A. Times article with board members at a meeting, it is not known exactly what he said there.
Tigar replied: “I’m having trouble imagining Mr. Stumpf telling the board about the L.A. Times article and saying it’s good news.”