Letter to Mr. Robert Cook, President and Chief Executive Officer, FINRA - Focus on Wells Fargo Fraud Scheme and Retaliation Against Employees Who Reported It

Letter

Dear Mr. Cook:

We write to request the Financial Industry Regulatory Authority (FINRA) establish an expedited review process for Wells Fargo whistleblowers and other unfairly terminated employees to clear their Uniform Termination Notice for Securities Industry Registration (Form U5), which may contain negative comments as a result of their attempts to report or resist fraud at Wells Fargo.

According to news reports[1], numerous employees who raised concerns about improper and abusive practices at Wells Fargo branches to their managers, the human resources department or the Wells Fargo ethics hotline were fired. Many more were fired for failure to meet aggressive and, as we now know, unattainable cross-selling quotas.

In September, Wells Fargo entered into a Consent Order with the Consumer Financial Protection Bureau with respect to improper and abusive practices (the Consent Order). Over the course of the five year period covered by the Consent Order, Wells Fargo terminated 5,300 employees for engaging in improper and abusive activity, resulting in the unauthorized opening of 2 million customer accounts. It is unknown, however, how many employees were terminated for reporting such activity at Wells Fargo, or terminated because they failed to meet the overly aggressive sales quotas. In other words, Wells Fargo appears to have terminated employees because they either refused to break the law, or reported unauthorized and abusive activity to their supervisors, the Wells Fargo ethics hotline or human resources. In fact, Wells Fargo CEO Timothy Sloan admitted on Thursday, November 10 that whistleblower complaints were inappropriately handled by its ethics department.[2]

We expect Wells Fargo to take immediate action to ensure customers with fraudulent accounts are compensated and made whole. This includes working with credit bureaus like Experian, Transunion and Equifax, to correct any harm to consumers' credit scores that resulted from the illegal opening of unauthorized credit cards, or the illegal transfer of funds from one account to another, all of which could have long lasting consequences on loan rates for cars, mortgages, and credit cards. Additionally, we now know it was not only customers who were harmed by the practices encouraged by Wells Fargo, terminated employees were affected, too, and continue to suffer.

As reported, many whistleblowers were fired for reporting wrongdoing at their branches and are now unable to find work at other banks because Wells Fargo claimed in their Form U5 a termination due to "failure to perform job duties" or other infractions. Further, at least one news report[3] indicates Wells Fargo failed to provide a whistleblower with a copy of the U5 document, a clear violation of FINRA requirements. Such a failure is a serious concern, and we ask you to investigate the details of that particular case and also whether the failure to provide such documents to employees was a systemic practice.

We appreciate FINRA's research into this matter, including a review of the termination documentation of over 600 Wells Fargo employees registered with FINRA. In light of the findings in the Consent Order and the numerous reports of former employees impacted by negative information provided to FINRA by Wells Fargo, it is critical FINRA establish an expedited process to allow employees who were wrongfully fired from Wells Fargo for refusing to break the law, or for reporting fraud, to clear their records. This process should also be available to those employees whose termination was based on unsupported, false claims or without cause.

FINRA's review must consider the Form U5 statements made by Wells Fargo in the context of the findings in the Consent Order and public statements made by Wells Fargo executives. It is crucial that in this review process FINRA provide the terminated employees as much technical assistance as possible in pursuing a review of the Form U5s, as well as consider amending the Form U5 to provide employees the opportunity to comment on the reason for termination. Furthermore, there have been reports of misconduct identified by former employees several years prior to the period covered by the Consent Order, and Wells Fargo has committed to research prior years to determine if employees were unfairly terminated. FINRA should research and review any applicable terminations subsequently identified by Wells Fargo.

It is clear that absent action by FINRA, the terminated employees will continue to suffer due to unjust and unwarranted stains on their records resulting from a pattern of misconduct that was encouraged, tolerated and concealed by their employer. Those employees deserve a thorough, critical review of their termination records given the knowledge of the conditions under which they were provided.

Please describe how FINRA can implement such a process and work to ensure former Wells Fargo employees are able to quickly correct their records, so they may find employment in the profession to which they have shown significant dedication.

We look forward to your response which we expect to receive no later than December 9, 2016.