Wells Fargo fired its public finance chief Stratford Shields, a move that shifts leadership of a banking group shaped by Shields over the last year.
The bank — the 6th largest senior manager so far this year — said it informed Shields and the public finance group of the dismissal Thursday and declined to comment on the reasons behind his firing. It came after Shields’ placement on administrative leave last month.
The public finance department was told it “would now be reporting to Marty Bingham,” a person close to banking staff said Thursday. The firm said it was not ready to announce a replacement, acting or permanent, for Shields.
A spokeswomen for Wells said the company is looking to fill the head of public finance role “shortly” and that person, once hired, will report to Bingham.
Shields, who joined the firm in November 2017, is not leaving silently as municipal managers often do when they are ousted with compensation packages that require discretion.
He placed the blame for his ouster, which followed his placement on “administrative leave” last month, on internal conflicts.
“Mr. Shields cannot yet comment in detail on the specific reasons for or terms of his departure, the latter of which is still being discussed,” a Shields representative said in an emailed statement. “By any objective measure, under the difficult institutional circumstances Mr. Shields inherited in his department, the public finance group had a strong 2018, including improved lead managed negotiated rankings, and is primed for an even better 2019.”
“Unfortunately, given recent organizational changes, it appears that certain Wells Fargo management team members used a baseless reason to engineer Mr. Shields' exit, in an attempt to escape contractual obligations.”
The representative declined to comment on whether Shields would pursue a lawsuit or arbitration with respect to his firing.
A person familiar with the situation said the power struggle stemmed from Phil Smith’s recent promotion to lead specialty industries. Shields began reporting to Bingham — who has headed up sales, trading, and syndicate — last month. Shields was close to Smith, who as executive vice president and head of Government and Institutional Banking at Wells Fargo had hired Shields.
Bingham and Shields clashed, said sources close to Shields and banking staff.
They said the administrative leave and firing were based on a shouting match witnessed by others between Shields and another banker. It’s not known who the argument was with, but it was not Bingham.
The San Francisco-based bank declined to comment.
Wells ranked 6th so far this year as a senior manager nationally with 227 issues valued at nearly $14 billion and was 7th last year with 288 issues valued at $23.1 billion.
Wells Fargo’ public finance group had been awaiting the results of the leave. Such leaves are not uncommon and can be triggered by a variety of complaints over potential violations of acceptable bank practices, said the source close to banking staff. Internally, some speculated that it might be resolved and Shields would return.
Internally, word began to spread this week that Shields would not return, said a source close to banking staff.
As that information began to spread throughout the public finance community this week, several negative stories surfaced and began to circulate internally and externally.
One involved a 1991 story in an Ohio newspaper that portrayed Shields in a negative light for false information on his resume and run-ins with the law. A second involved an alleged impropriety over hiring and efforts to win bond work.
Information of the spread of those stories came from a handful of sources in multiple regions.
“You are under a spotlight” once a review is triggered, and that can lead to the revelations or the resurfacing of other negative information unrelated to the incident that resulted in leave status coming out, said person close to Wells banking staff.
The firm said neither issue drove the firing.
Shields’ representative also said neither was behind the firing and added the Ohio story was “old news” and Shields has no knowledge of any allegation about improper business practices.
The new developments within the Wells Fargo banking team come as the firm has worked to recover over the last two years from damage inflicted in 2016 over the phony banking accounts scandal on the commercial side.
The firm faced fines imposed by the Consumer Financial Protection Bureau and 5,000 employees were fired over business practices that drove employees to create more than two million new accounts without customers' knowledge or authorization, in order to generate new fee revenue.
The investment banking side suffered fallout as some prominent local and state issuers in California, llinois, New York and Ohio shunned doing bond or other financial services’ business with the bank. Many of those bans have since eased.
“It’s quite sad. The firm is under so much scrutiny and trying so hard to rebuild its reputation,” said one public finance source with close ties to the firm. “He was a good leader and worked hard.”
The source said speculation is that a larger reorganization may be in the works.
Shields had previously worked as managing director and Midwest regional manager for RBC Capital Markets. He replaced Peter Hill, who left Wells Fargo in April 2017 to lead public finance at UBS Wealth Management Americas. He spent two decades in banking at Morgan Stanley, rising to manager of the banking group.
During his tenure, Shields put his mark on the group, shedding some bankers while bringing on others, some of whom he’d worked with at Morgan Stanley and RBC.
The firm’s staffing headlines have been mixed this year. Earlier in the spring, the bank confirmed 15 professionals had left the bank's public finance division, attributing the departures to adjustments over market conditions and the hiring of a new public finance director.
“We are repositioning the public finance business to gain market share after a strategic review and a change in leadership,” a Wells Fargo spokesman said at the time. Staffing changes could leave Wells Fargo up or down 10% in public finance numbers by year end, the spokesman said.
The elimination of advance refundings and reduction in long-term new money bond sales, which has impacted the entire sector, was having a bigger impact on the bank's municipal bond side than any fallout from the fake-accounts revelations, firm officials said in the May interview.
Wells Fargo has remained in active hiring mode in several sectors announcing a string of hirers including new housing bankers and public-private partnership and southern regional bankers, and healthcare bankers in the second half of the year.
—Richard Williamson contributed to this story
