BOSTON, Oct 6 (Reuters) - Union pension fund adviser CtW Investment Group on Thursday called on boards of large U.S. banks to review their employment practices in light of the scandal over fake customer accounts at Wells Fargo & Co, and said it likely would not support the re-election of directors who failed to comply.
The letters come amid a renewed round of scrutiny on whether big lenders’ sales practices have grown too aggressive. Massachusetts’ top securities regulator on Monday charged Morgan Stanley with “dishonest and unethical conduct” for having pushed its brokers to sell loans to clients.
CtW, which says it works with union pension funds managing more than $250 billion, said it sent letters to directors at banks including JPMorgan Chase & Co, Bank of America, and Citigroup calling for them to review areas such as whether workers’ pay incentives encourage unethical behavior, or whether employees might face retaliation for raising concerns.
In its letters CtW said the Wells Fargo case “evinces the significant risks that inappropriate and poorly designed human capital management practices may pose to a bank’s operations, reputation, and regulatory standing.”
On Sept. 8, San Francisco-based Wells Fargo reached a $190 million settlement regulators over accusations that it opened up to 2 million accounts without customers’ permission. Other authorities have since begun probes while Chief Executive Officer John Stumpf faces political pressure and calls to resign.
CtW’s efforts in the past have helped bring about changes such as the departure of directors from JPMorgan after the so-called “London Whale” trading debacle. It has also called on Wells Fargo to take actions such as adding two new directors with human capital expertise.
Other activists meanwhile have filed shareholder resolutions calling on Wells Fargo to study a breakup and to split the roles of chairman and CEO.
Spokespeople for JPMorgan, Bank of America Corp and Citigroup Inc each declined to comment.
Reporting by Ross Kerber; Editing by Cynthia Osterman