|Wells Fargo CEO John Stumpf testifying in Congress last week.|
One of SEIU-UHW President Dave Regan’s closest CEO buddies -- Lloyd Dean, CEO of Dignity Health -- is neck-deep in the scandal that’s rocking Wells Fargo. In fact, Dean -- who serves on Wells Fargo’s Board of Directors -- may have used insider information at the bank to improperly line his pockets, according to SEC records not been previously reported.
The episode offers another glimpse at the harmful effects of Regan’s collaborationist approach with corporations.
Headquartered in San Francisco, Dignity Health is the fifth largest health system in the nation and is the largest hospital company in California. In 2014, Dignity paid Lloyd Dean $8.1 million, according to the company’s federal tax returns.
Dean, in addition to his full-time job at Dignity, has plenty of time to work well-paid gigs on the side … like serving on Wells Fargo’s Board of Directors.
At the bank, Dean headed the “Corporate Responsibility Committee,” charged with monitoring “customer service and complaint matters,” at the same time that Wells Fargo was quietly setting up 2 million phony accounts for customers, according to proxy statements cited by Fortune Magazine. The fake accounts -- which forced bank customers to pay service fees on debit cards, credit cards, and other accounts they never authorized -- boosted Wells Fargo’s profits.
Here’s an excerpt from the Fortune Magazine article published last week (“The Wells Fargo Board Committee in Charge of Stopping Phony Accounts Rarely Met”):
A review of board records in Wells Fargo’s annual proxy filings of the past few years suggests that, even as scrutiny of Wells Fargo’s consumer practices was ramping up outside the bank… officials at the highest levels of the company, who were most responsible, did little—that is, the absolute minimum—to address the bank’s growing problem.
None of that, though, or the aftermath, appears to have curtailed the payday of the board members involved…
The bank’s board formed the corporate responsibility committee in 2011. It was first headed by Lloyd Dean, another Wells Fargo board member, who now heads the committee that oversees compensation. Dean was paid $346,027 in cash and stock last year.
Dean’s role as chair of Wells Fargo’s compensation committee is important to note given that the bank’s aggressive sales quotas and financial incentive programs are at the heart of the fraud it perpetrated on millions of customers.
In recent weeks, Wells Fargo agreed to pay more than $200 million in fines. Some executives may face criminal charges. Meanwhile, Wells Fargo’s CEO John Stumpf was forced to give back $41 million in compensation due to public pressure.
But don’t cry for Stumpf.
He’s still sitting on $247 million in Wells Fargo stock, according to SEC records.
Earlier this week, Congresswoman Carolyn Maloney (D-NY) ripped Stumpf a new one during a hearing on Capitol Hill. She presented evidence that in October 2013, Stumpf appeared to have used insider information to sell $13 million of his own shares of Wells Fargo stock just before the bank’s fraud became publicly known.
Why is the timing of Stumpf’s stock sell-off significant?
During Stumpf’s testimony before a Senate panel on September 20, 2016, he said he first learned of his bank’s fraud in “late 2013.”
Here’s a video of Rep. Maloney interrogating Stumpf.
Did other fatcat insiders dump their stock at the same time?
What about, umm, Dignity Health CEO Lloyd Dean?
According to SEC disclosure forms, Dean carried out the same stock-dumping transactions just a handful of days after Stumpf did.
In early November of 2013, Dean sold Wells Fargo stock worth more than $520,000. Dean had acquired the 12,330 shares through a special stock purchase option program available to the company’s Board of Directors.
In March 2016, Dean and his family trust sold another $327,051 worth of Wells Fargo stock, according to SEC records.
See below for copies of Dean’s and Stumpf's SEC Forms 4.
What’s SEIU-UHW President Dave Regan’s relationship to Lloyd Dean?
Dave “Wall Street” Regan, who favors “partnerships” and secret backroom deals with CEOs, has worked hand-in-glove with Dean for years.
In 2008-09, Regan secretly conspired with Dean to carry out SEIU’s trusteeship against California’s militant healthcare workers union, then headed by Sal Rosselli.
In an apparent payback, Regan then delivered hundreds of millions of dollars to Dean by negotiating massive wage and benefit cuts affecting SEIU-UHW’s 14,000 members at Dignity hospitals in California.
In 2010, for example, Regan eliminated SEIU-UHW members’ defined-benefit pension plan, delivering Dignity a $217 million windfall, according to the company’s financial statements.
In 2012, Regan allowed Dignity to freeze SEIU-UHW members’ wages and to implement more benefit cuts... even though the company was making massive profits.
In 2015 and 2016, Regan negotiated more cuts for workers.
And in 2014, Regan famously signed a secret partnership deal with the California Hospital Association, Dignity Health, Kaiser Permanente, and other corporations. The deal, which was designed to institute “a new model of labor relations,” included bans on worker strikes and implemented a gag clause that blocked SEIU-UHW and its members from supporting any regulatory action, legislation, or ballot initiative adverse to the interests of Dignity Health and the California hospital industry.
The secret pact’s provisions, which were eventually made public through litigation, also prohibited SEIU-UHW -- California’s largest healthcare workers union -- from “raising concern about... executive compensation in health care."
With the stroke of his pen, Regan silenced SEIU-UHW and its members from voicing any criticism of Dean’s outrageously high salary at Dignity Health... not to mention his apparently gold-plated insider trading at Wells Fargo.