San Francisco, California - Former Wells Fargo CEO, Tim Sloan, has filed a lawsuit against the bank, alleging that they failed to compensate him with over $34 million following his resignation in 2019 amidst a widespread sales practices scandal. The lawsuit, filed in California state court, claims that Sloan's stock awards were canceled and that a bonus he had earned was withheld by Wells Fargo.

Wells Fargo responded to the lawsuit, stating that their compensation decisions are based on performance, and they stand by their actions in this matter. Sloan, who led the bank from 2016 to 2019, became the second CEO to step down in relation to the revelation that the bank had opened millions of unauthorized consumer accounts.

In 2020, Wells Fargo agreed to pay a total of $4 billion to resolve criminal and civil probes into the sales practices scandal. This included a $3 billion settlement and an additional $1 billion settlement in a lawsuit brought by shareholders earlier this year. The bank admitted that between 2002 and 2016, employees were pressured to meet unrealistic sales goals, leading to the opening of fraudulent accounts.

The scandal prompted scrutiny from shareholders and government officials, resulting in the Federal Reserve imposing a cap on Wells Fargo's assets. As per the Fed's order in 2018, the bank was required to keep its assets below $1.95 trillion until it demonstrated improvements in governance and risk controls. This asset cap remains in effect to this day.

In his lawsuit, Sloan asserts that he was not responsible for the sales practices scandal, which began before he assumed the role of CEO. He claims to have been made a scapegoat by the board of directors, ultimately leading to his forced resignation. Sloan's lawyers challenge Wells Fargo to provide evidence justifying their decision to withhold his compensation and to pinpoint any actions he supposedly undertook to merit such treatment.

At the time of his resignation, Sloan cited the distractions caused by the focus on him as hindering the bank's progress. The former CEO accuses Wells Fargo of breach of contract and is seeking not only the $34 million in withheld pay and stock but also unspecified damages for emotional distress and punitive damages.

Sloan's lawyer, David Lowe, based in San Francisco, has established a reputation for handling high-profile employment lawsuits. Notably, Lowe has represented multiple female Tesla employees in sexual harassment cases. He also successfully litigated the case of former Pinterest COO Francoise Brougher, who claimed she was fired due to her complaints about gender discrimination. Pinterest settled that case for $22.5 million in 2020, despite denying any wrongdoing.

As this legal battle unfolds, the impact of the sales practices scandal on Wells Fargo's reputation and ongoing challenges with governance and risk controls continue to reverberate throughout the banking industry. The outcome of Tim Sloan's lawsuit could have significant implications for the bank's future and may influence how executive compensation is handled in similar corporate controversies.