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Code Of Ethics And Ethical Issues In Wells Fargo

678 Words3 Pages

Internal control is a process which consists of five components designed to provide reasonable assurance on the company objectives’ achievement, such as effectiveness and efficiency of operations, compliance with laws and regulations, the reliability of financial accounting information and safeguarding assets. It is an important business practice as it can help the company to reduce risk by detecting and preventing fraud and protecting the company’s properties and resources. Wells Fargo has poor corporate culture as there is a lack of integrity and ethical values in their internal control. The employees had created about 2 million bank and credit card accounts in the name of their customers without their acknowledgment and consent in order to achieve the extreme sales targets set by the management for the employees to cross-sell additional banking products or services to the existing …show more content…

However, the existence of this unethical accounting scandal issue has been unfolded by the employees since 2005 (Cowley, S., 2016), but the management failed to take any action to prohibit these illegal activities instead they continue practicing this until it is being exposed to the public. According to Wells Fargo CEO John Stumpf, they also failed to make any public disclosure regarding to these illegal activities. The amounts involved in this issue were seen to be immaterial to the bank’s size (Curtis, C., Verschoor, CMA, CPA, 2016). The management have override the internal control of Well Fargo. This shows that the bank has poorly evaluates and communicates the internal control deficiencies periodically to the responsible parties to take corrective actions and therefore, allowing illegal activities to take

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Nevertheless, Wells Fargo has been fully accountable by taking immediate actions and measures to rectify the issue arose. First, the company was transparent in disclosing the unethical sales practice. Customers who were affected by the fraud are given reimbursement and fines of $185 million were paid to regulators. The company also closed more branches to focus on automated online banking. Based on the literature review, being held accountable is associated with answerability towards all stakeholders including the public.

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Due to the scandal, Wells Fargo faced customer confidence issues. Trevino and Nelson suggest customer confidence issues include confidentiality, product safety and effectiveness, truth in advertising, and special fiduciary responsibilities (126). Based on the unethical behavior noted in the scandals, the organization violated the customer’s privacy and failed to perform their fiduciary responsibilities on multiple occasions. Wells Fargo and its employees broken several laws to meet quotas and make profit for the organization. In this scandal, there are legal implications to be faces noted in court documents include but not limited to fraudulently opening accounts without the consent of a customer, falsifying credit documents, identity theft

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742 Words | 3 Pages

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981 Words | 4 Pages

1. Background The recent scandal of two million fraud accounts opened by employees in Wells Fargo not only had cost the bank a large amount of fine, it had also led to layoffs of over 5000 employees and customer outrage (Kate, 2016). The scandal has revealed the company’s inappropriate corporate social responsibility (CSR) practices on its customers and employees. 2.

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867 Words | 4 Pages

In September 2016, Wells Fargo agreed to pay $185M in fines and return $5 million in fees wrongly charged to customers because of unethical sales practices. (Zoltners, Sinha, & Lorimer, 2016). Wells Fargo, over several years, opened over 2 million bank and credit card accounts without customers’ permission, or knowledge. The deception took several years to uncover because these unauthorized accounts generated only small, unnoticeable monthly fees that most people did not recognize or become alarmed over when they were recognized on statements. Over time, however, these fees became more visible as the total value of the fees became large and the scheme was uncovered.

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1440 Words | 6 Pages

But in late 2016, according to news reports and testimony before the U.S. Congress, company representatives publicly conceded that the incentive resulted in disaster. Over a period of at least five years, Wells Fargo employees created more than 1.5 million unauthorized deposit accounts, and at least 500,000 unauthorized credit card

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2317 Words | 10 Pages

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457 Words | 2 Pages

The Wells Fargo Fake Account made national headlines in mid-2016 different from other historical scandals such as Enron and Volkswagen engineers and their emissions “workaround.” The Wells Fargo scandal did not include a few wrongdoers within the organization, instead the unethical behaviors was widespread at the bank with thousands of employees being involved. According to a lawsuit filed by the state of California against Wells Fargo in May 2015, it claims employees engaged in “unlawful and fraudulent conduct, including opening customer accounts and issuing credit cards without authorization” and the bank “has known about and encouraged these practices for years.” The suit also cites “the results is that Wells Fargo has engineered a virtual fee-generating machine, through which its customers are harmed, its employees take the blame, and Wells Fargo reaps the profits.” The shocking scandal of 2016 is employees of Well Fargo secretly created over 2 million new bank and credit card accounts for over 15,000 customers without their knowledge, resulting in overdraft and other fees.

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456 Words | 2 Pages

This can be seen when John Stumphf - former chairman and CEO of Wells Fargo was interviewed by Wall Street Journal, he was asked who was responsible for the negative culture which resulted to the 2 million fraud account in which he refused to answer and denied that the organization has encouraged such culture and proceeds to blame low paid employees of Wells Fargo for being the bad apples of the company (Bellware, 2016; Raymond, 2016).

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