Stumpf did the right thing, but Wells Fargo board should have acted sooner, Sonnefeld says

John Stumpf did the right thing in resigning, but Wells Fargo‘s board should have acted sooner to clean up the phony accounts scandal, management expert Jeffrey Sonnenfeld said Thursday.

In an interview on CNBC’s “Squawk Box,” the associate dean of Yale’s School of Management called it a “shame” that the board’s instincts were so poor when it came to the scandal, even though the board was largely kept in the dark that about 2 million unauthorized accounts had been created after 2011.

“They should’ve started this investigation years ago, certainly months ago, and the fact that they’ve only started their own legal investigation now stands in stark contrast to Yahoo’s much better responsiveness to the governance issue under Marissa Mayer and investigating their scandals,” Sonnenfeld said.

“I think that the board acted wisely and late, and I do think that John Stumpf did the right thing,” Sonnenfeld added.

He added that he was not so sure the leadership was, in fact, kept entirely out of the loop.

Sonnenfeld said former SEC Chairman Richard Breeden told him that Stumpf and Wells Fargo CFO John Shrewsberry signed off on significant financial forms without disclosing that any fraudulent activity was taking place.

Sonnenfeld said he was less than pleased with the Senate hearings that ensued after news broke in September about Wells Fargo’s $185 million settlement with regulators over the matter.

He said he was “astounded” by how long it took the former CEO to apologize in the hearing. Stumpf “wouldn’t even acknowledge that there was a deep, systemic cultural problem,” Sonnenfeld said.

Investors also were misled, according to Sonnenfeld.

“This was critical to the stock rise,” Sonnenfeld said. “He was using [the phony accounts] to head off, or at least embed deeply in, quite a number of investor calls, talking about the success of cross-selling, building this platform for the future.”

Wells Fargo declined to comment beyond its announcement of Stumpf’s retirement.

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