(Adds background on federal, investor comment)
By Ross Kerber
BOSTON, Sept 14 An activist investor said on
Wednesday it is "inevitable" that Wells Fargo & Co will
face critical shareholder resolutions after the bank agreed to a
$190 million settlement with regulators over fake consumer
Tim Smith, who leads shareholder engagement efforts at
Walden Asset Management in Boston, said his firm is talking with
investors including state pension funds and labor groups about
submitting resolutions for the bank's springtime shareholder
meeting that may call for things like clawing back executive pay
or requiring the company to report on its governance procedures.
The largest U.S. bank by market capitalization last week
said it would pay $185 million in penalties and $5 million to
customers that regulators say were pushed into fee-generating
accounts they never requested.
"It's inevitable that Wells Fargo will face a series of
critical shareholder resolutions in light of this scandal,"
Smith said in a telephone interview on Wednesday.
A Wells Fargo spokesman declined to comment.
Federal prosecutors are in the early stages of an
investigation into sales practices at Wells Fargo, the Wall
Street Journal reported, citing people familiar with the matter.
Shareholder resolutions could be a black eye for San
Francisco-based Wells Fargo, which has avoided some of the
investor backlash that other large banks faced coming out of the
financial crisis under pressure from Walden and other activists.
JPMorgan Chase & Co for instance agreed to publish a
report in 2014 outlining improved controls it put in place
including pay clawbacks and minimum share ownership requirements
Also, in 2015 pension funds including the California Public
Employees' Retirement System challenged Bank of America to split
the dual roles of its chair and CEO Brian Moynihan, though their
Smith said a move to split the dual roles of Wells Fargo
Chairman and CEO John Stumpf is also a possibility. A vote in
April to require an independent chairman at Wells Fargo drew
support from only 17 percent of votes cast.
Asked about Wells Fargo's recent settlement, Calpers
spokeswoman Megan White said via e-mail the system "will be
reviewing the issue in our proxy vote" and declined further
Sanjay Sen, chief investment officer of BloombergSen
Investment Partners in Toronto, which has about 2.3 million
Wells Fargo shares, said via e-mail that his firm would support
any resolution that improves Wells Fargo's management or
Considering the intense focus of regulators and popular
distrust of big banks "It really is crazy how stupidly Wells
management has behaved," Sen said via e-mail.
(Reporting by Ross Kerber in Boston. Additional reporting by
Dan Freed in New York. Editing by Chris Reese and Andrew Hay)