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Wells Fargo CEO John Stumpf Steps Down Amid Investigation

- By Holly LaFon

Wells Fargo & Company (WFC) announced Wednesday evening that its chairman and CEO John Stumpf would retire from the company effective immediately.

The bank is replacing Stumpf with Tim Sloan, its president and chief operating officer, who it also elected to the board, and Stephen Sanger, its lead director as its non-executive chairman.

Stumpf joined the bank in 1982, rising to CEO in 2007 and to chairman in July 2010. Sloan began at Wells 29 years ago, taking on various leadership roles such as head of commercial banking, real estate and specialized financial services, before assuming the roles of chief administrative officer and chief administrative officer. He rose to president and COO in November 2015.

"John Stumpf has dedicated his professional life to banking, successfully leading Wells Fargo through the financial crisis and the largest merger in banking history, and helping to create one of the strongest and most well-known financial services companies in the world," Sanger said. "However, he believes new leadership at this time is appropriate to guide Wells Fargo through its current challenges and take the Company forward."

Shares of Wells Fargo, the largest bank in the U.S., have fallen 16.63% year to date, sunk by news that employees created millions of fake bank accounts of customers to meet stringent sales requirements. His job has hung in the balance since the event, though he has been involved with sweeping changes the bank's board has made to operations to snuff out fraudulent practices. On Sept. 29, Wells announced it would eliminate retail banking product sales goals by Oct. 1, faster than they the Jan. 1 date previous scheduled, and had launched an independent investigation of the affairs.

Stumpf had already relinquished $41 million in unvested equity awards, his 2016 bonus and his salary during the investigation as a result of the misdeeds under his watch.

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This article first appeared on GuruFocus.