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John Stumpf, CEO Of Wells Fargo

996 Words4 Pages

Seydi Burak GAYRETLİ MGMT 512 – Corporate Governance EXAM 1 WELLS FARGO FAKE ACCOUNT SCANDAL In September 2016, we learned that Wells Fargo, one of the biggest banks in USA, has millions of accounts which is created by employees without authorization of customers. Employees have created those phony bank and credit cards accounts since 2011. By those accounts, Wells Fargo employees reached their targets and received bonuses. 5.300 employees are fired because of 2 million fake accounts. According to a statement of Consumer Financial Protection Bureau, those employees registered online banking services on behalf of customers by creating fake PIN numbers and fake email addresses. Analysts estimates that there were over 1.5 …show more content…

Wells Fargo stated that they take responsibility about their mistakes and they take action. Former employees and managers said, they were responsible to meet unrealistic sale targets and they had pressure from senior management. These unrealistic sales goals led employees to create fake accounts not to lose their jobs. Some former Wells Fargo workers stated that they informed top management about those fake accounts, but they were fired soon. John Stumpf, CEO of Wells Fargo, announced his retirement because of pressure from the public. Wells Fargo also made some major changes to gain the trust of their customers and stakeholders. They gave up unrealistic sales goals for employees. They also hire Tim Sloan as their new CEO. After this scandal, Wells Fargo was investigated by authorities. Results of those investigations led bank to take more disciplinary actions against both employees and C-level executives. Those disciplinary actions are announced to public to gain back the trust they lose and to ensure people that they will prevent this situation repeat. Wells Fargo also didn’t give 2016 bonuses to top executives and use this money …show more content…

They also claimed that they have audit procedures to prevent from illegal sales. Signals of phony sales were clear, but the board had not investigate it until 2016. The board also didn’t investigate its own members. It was their failure to miss signals of illegal sales and to reject inside and outside returns. They should have analyzed the data deeply and examine employees about suspicious points. The board should also listen to their employees who complain about unrealistic sales target. It was a good but late action to give up sales targets. Because the main reason of this scandal was sales culture and performance management system of the bank. This aggressive sales management system led employees to create phony accounts. They should have changed their cross-selling incentive policies earlier. They also separated Chair and CEO positions. It was also a good action for CEO to spare time to company policies. The board has a whistleblower hotline as it should be. But it was not enough to prevent illegal behaviors. They should also visit employees regularly and talk to them. Employees don’t always come to managers. It is more promotive to go to

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In 2016, Wells Fargo was accused of opening millions of accounts in the names of clients, who were completely unaware of what was going on. They were signed up for life insurance and other similar programs, as well as many other things involving them, but they did not know this was happening (“Attorney General Shapiro Announces $575 Million 50-State Settlement”). The employees were told to do this in order to meet the company’s sales goals (Kolhatkar, Sheelah). They were pressured into it because their bosses expected higher sales. They started by making fake accounts in the names of their current clients, but then went ahead and added the customers to different financial services without permission (“The Wells Fargo Fake Accounts Scandal”).

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