Wells Fargo & Co. is expected to choose an external candidate as its new legal chief, according to three sources familiar with the matter.
The search is approaching its final stages with candidates being vetted by senior bank executives, said one current Wells Fargo in-house lawyer, who was not authorized to speak about the process. An announcement is expected within the next few weeks, the source said.
The prospects for an internal promotion within the general counsel’s office have dimmed since CEO Charles Scharf joined Wells Fargo in October. Scharf, who is based in New York, has publicly emphasized the need for big changes at the San Francisco-based bank still reeling from a fake account scandal that emerged in late 2016.
The Office of the Comptroller of the Currency announced record fines Jan. 23 against eight former executives, including former general counsel James Strother, who faces a $5 million civil penalty.
A spokesman for the bank said it would have no further comment about its search for a new in-house legal chief, aside from what Scharf said on a Jan. 13 earnings call.
“Allen Parker, who served both as general counsel and interim CEO, announced he will be leaving Wells in March,” Scharf said. “We are well into a search for the new general counsel and excited about the quality of the candidates we’ve met.”
Scharf is expected to look for a chief legal adviser beyond a law department dominated by lawyers who joined Wells Fargo following its takeover of Wachovia Corp. during the 2008 financial crisis.
Several individuals knowledgeable of C-suite searches told Bloomberg Law that Scharf, a former CEO of the Bank of New York Mellon Corp. and head of the retail services division at JPMorgan Chase & Co., will likely have sought input from top financial regulatory lawyers with ties to both of those banks.
Among those Scharf may have consulted is Stephen Cutler, a former vice chairman and general counsel at JPMorgan who left the bank in 2018. Cutler is now a partner at Simpson Thacher & Bartlett in New York, where he heads the law firm’s government and internal investigations practice. He declined to comment.
Another likely adviser is J. Kevin McCarthy, who has served as general counsel of BNY Mellon since 2014. He was traveling Friday and unavailable for immediate comment.
Two veteran bank regulatory lawyers familiar with high-level executive legal searches told Bloomberg Law that it was unlikely that either McCarthy or Cutler would give up their current positions to join Wells Fargo.
Wells Fargo confirmed in November that Parker, a former presiding partner of the law firm Cravath Swaine & Moore who relocated in March 2017 from New York to San Francisco to become general counsel, would leave this March to “pursue other business opportunities.”
Parker became interim CEO of Wells Fargo last year following the resignation of Tim Sloan. Succeeding him as general counsel on an interim basis was Douglas Edwards, a former deputy general counsel at Wells Fargo who joined the financial services giant in 2008 as a result of its $15.1 billion merger with Charlotte-based Wachovia.
Neither Edwards nor Parker responded to requests for comment about the selection process for a new general counsel. In October, Wells Fargo said it would take a $1.6 billion charge for litigation costs stemming from the unauthorized accounts scandal at its retail bank.
Bloomberg Law data shows that within the last three years, Locke Lord has taken the lead for Wells Fargo by handling 12.5% of the company’s litigation portfolio, followed by West Coast law firm Anglin Flewelling Rasmussen Campbell & Trytten (9.3%), San Francisco-based Severson & Werson (5.3%), Reed Smith (5%), Snell & Wilmer (4.3%), and K&L Gates (4.3%).
Change is already coming to Wells Fargo’s legal group.
David Moskowitz, a longtime in-house lawyer at Wells Fargo who has spent nearly the past three years as head of government relations and public policy for the bank, is set to retire in March. Bloomberg News reported in December that William Daley, a former Mayer Brown partner who recently joined Wells Fargo as vice chairman of public affairs, has taken over most of Moskowitz’s duties.
Moskowitz, who did not respond to a request for comment, moved from Des Moines to Washington as a member of the legal group to advise on regulatory relations. In early 2017, he took up his current public policy role outside of the law department following the resignation of former Wells Fargo CEO John Stumpf, one of the first executives to fall at the bank.
Stumpf was hit with a $17.5 million fine and banned from the banking industry Jan. 23 by the OCC, which is also seeking a $5 million civil penalty for Strother, who succeeded Stanley Stroup as Wells Fargo’s general counsel in 2003 and retired from the bank in 2017.
Strother did not respond to a request for comment about the OCC’s actions, but his lawyer, Walt Brown, a partner and leader of the white-collar criminal defense practice at Orrick Herrington & Sutcliffe in San Francisco, blasted the federal regulator in a statement.
“Mr. Strother acted with the utmost integrity and transparency, including with the bank’s board, senior management, and its regulators,” said Brown, noting his client had dedicated more than 30 years of his life to Wells Fargo and led it through challenging legal and regulatory times. “The OCC’s charges against Mr. Strother are false and unfounded, and he intends to vigorously defend against them.”
Two former Wells Fargo in-house lawyers who spoke with Bloomberg Law expressed dismay at the punishment levied by the OCC against Strother, whom they called a conservative, risk-averse lawyer who was widely admired by his colleagues at the bank.
“To do this to Jim, who might be the nicest, most caring person I’ve ever met, is just an absolute shame,” one former Wells Fargo lawyer said. “Wells Fargo had its problems, but they should not be on him.”