There has been a major development in the case of Wells Fargo and the harsh incentives it allegedly put in place to encourage its private bankers to open fraudulent accounts. A former branch manager in Pomona, California, was fired after she brought forward concerns about conduct that she reasonably believed constituted mail, wire and bank fraud to her superiors.
Investigators from the Occupational Safety and Health Administration determined that the branch manager’s termination was due, at least in part, to her having blown the whistle on Wells Fargo’s allegedly fraudulent activities.
Under the Sarbanes-Oxley Act and the Consumer Financial Protection Act of 2010, however, whistleblowers are legally protected from retaliation by employers.
“No banking industry employee should fear retaliation for raising concerns about fraud and practices that violate consumer financial protections,” said an OSHA regional administrator in San Francisco. OSHA is the division of the Department of Labor that enforces whistleblower protections under the Sarbanes-Oxley Act, the Consumer Financial Protection Act of 2010 and 20 other statutes.
OSHA ordered Wells Fargo to reinstate the former branch manager to her job and to compensate her for her lost wages, damages and her attorney’s fees. Those compensatory damages were calculated by OSHA at over $577,500. The banking giant must also post notices about whistleblower protections for all employees.
Wells Fargo has the right to appeal OSHA’s findings to an administrative law judge, but doing so will not prevent this order from being implemented in the meantime.
The bank responded with a statement that the OSHA’s order was preliminary and “there has been no hearing on the merits of this case. We disagree with the findings and will be requesting a full hearing of the matter.”
Wells Fargo already forced to reinstate and compensate another whistleblower
The news of the Pomona branch manager’s order for reinstatement and damages comes just months after OSHA ordered Wells Fargo to reinstate and compensate another whistleblower — a bank manager from Los Angeles. He was to receive $5.4 million.
Meanwhile last year, after a LA Times investigation discovered that numerous bank employees had been pressured into opening millions of unauthorized accounts, regulators levied a $185-million fine against the bank.
The wronged customers are also involved in litigation. Earlier this month, a proposed class action settlement between Wells Fargo and the customers was preliminarily approved by a federal judge.