Bank Execs Settle OCC Charges for Systemic Sales Practice Misconduct

Three former bank senior executives settled OCC charges for widespread and systemic sales practices misconduct. The OCC found that the executives oversaw "unsafe or unsound" bank practices that led to unauthorized accounts, unauthorized transfers of customer funds and falsified customer information. 

The OCC found that the prevailing bank culture was rooted in an aggressive business model that forced employees to choose between engaging in unethical practices or risking termination. 

According to the first Order, the OCC found a former Group Risk Officer ("GRO") (i) failed to escalate issues of sales practice misconduct; (ii) provided false, misleading and incomplete information to the regulators; and (iii) failed to address the bank's incentive compensation program.  As a result, the OCC barred the GRO from working in the banking industry and fined her a $10 million civil money penalty.

According to the second Order, the OCC found that the Chief Auditor and the former Executive Audit Director (i) failed to adequately address the sales practice risks in the audit plan; (ii) ignored activities that were inappropriate; and (iii) provided misleading information to the bank's Board, including claims that the audit controls were effective. The OCC found that the former Executive Audit Director (i) narrowed the scope of an audit to avoid focus on account opponents; (ii) did not escalate problems; and (iii) was compromised in his judgment by virtue of his relationship with the bank's executives. The OCC issued cease-and-desist orders, along with civil monetary penalties ($7 million for the former Chief Auditor and $1.5 million for the former Executive Audit Director).