The news comes just five days after a participant in the company’s 401(k) plan filed a proposed class action lawsuit over the drop in the company’s stock price following revelations of alleged illegal cross-selling by Wells Fargo staff in order to meet sales quotas.
“Bringing claims under the Employee Retirement Income Security Act, the new lawsuit alleges that Wells Fargo allowed workers to continue investing retirement savings in the company’s stock, despite knowing that stock price was artificially inflated because of the not-yet-uncovered cross-selling scheme,” Bloomberg BNA first reported. “According to the complaint, Wells Fargo’s stock price nearly doubled during the six-year period of increased cross-selling, before dropping in value once news of the scheme broke.”
Tim Sloan, the company’s president and chief operating officer will succeed Stumpf. His appointment as CEO, as well as an election to the bank’s board, are effective immediately. He will also retain the title of president.
Sloan said his “immediate and highest priority” is to restore trust in Wells Fargo.
“It’s a tremendous responsibility, one which I look forward to taking on, because of the incredible caliber of our people, and the opportunity we have to impact the lives of our millions of customers around the world,” he added in a statement. “We will work tirelessly to build a stronger and better Wells Fargo for generations to come.”
Stumpf, a 34-year veteran of the company, joined Wells Fargo in 1982 as part of the former Norwest Bank, becoming Wells Fargo’s CEO in June 2007 and its chairman in January 2010.
Sloan joined Wells Fargo 29 years ago, launching a career that would include numerous leadership roles across the company’s wholesale and commercial banking operations, including as head of commercial banking, real estate and specialized financial services. He became president and COO in November 2015.