The Securities and Exchange Commission today charged the former head of Wells Fargo & Co.'s Community Bank Carrie L. Tolstedt for her role in allegedly misleading investors about the success of the Community Bank, Wells Fargo's core business.  The SEC previously filed settled charges against Wells Fargo for engaging in the misconduct.

According to the SEC's complaint, from mid-2014 through mid-2016, Tolstedt publicly described and endorsed Wells Fargo's "cross-sell metric" as a means of measuring Wells Fargo's financial success despite the fact that this metric was inflated by accounts and services that were unused, unneeded, or unauthorized. The complaint further alleges that Tolstedt signed misleading sub-certifications as to the accuracy of Wells Fargo's public disclosures when she knew or was reckless in not knowing that statements in those disclosures regarding Wells Fargo's cross-sell metric were materially false and misleading.

The SEC's complaint, filed in the U.S. District Court for the Northern District of California, charges Tolstedt with violations of the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and with aiding and abetting violations of Exchange Act Sections 10(b), 13(a), and 13(b)(2)(A) as well as Exchange Act Rules 10b-5, 13a-1, 13a-13, and 12b-20. The complaint seeks injunctive relief, civil penalties, disgorgement with prejudgment interest, and an officer and director bar.