TL;DR –The Wells Fargo Vice President who oversaw the retail division which was responsible for mass fraud should have been fired rather than allowed to retire. The article “In Wells Fargo Scandal, the Buck Stopped Well Short” by Susan Ochs examines the behavior of Wells Fargo in regards to the Carrie Tolstedt. Carrie Tolstedt was the Wells Fargo Community Banking senior vice president during the time where thousands of fraudulent accounts were created by employees who directly or indirectly reported to her. Starting last November, Wells Fargo was under investigation of fraud based on customer complaints concerning account being opened in their name without their knowledge. Ms. Tolstedt was in charge of over 94,000 employees in the Community Banking division during the five years of fraudulent activity.
The scandal was revealed by a whistleblower. Wells Fargo had to pay him $22 million in damages (“Wells Fargo Whistleblower Retaliation”). Their stock prices drastically fell once the public found out about what had been going on (“The Wells Fargo Fake Accounts Scandal”). The Consumer Financial Protection Bureau fined Wells Fargo $185,000,000 (Kolhatkar, Sheelah), but after other fines and settlements, they ended up paying several billion dollars. Several of the highest executives received criminal charges, including fraud, conspiracy, and lying to the overseers (“The Wells Fargo Fake Accounts
In May of 2015, Wells Fargo faces a class action lawsuit, led by Mike Feuer, lawyer of the city of Los Angeles, for the dishonest and complete disregard to the treatment of its workers and clients. As far as the case goes, Wells Fargo has been blamed for setting unrealistic goals for its workers, actuating them to use deceitful means for meeting the set standards. Wells Fargo has basically set itself up for a classic case of “Ill-Conceived Goals, where such high pressures are set onto the workforce, to the point where they are willing to break their own integrity and furthermore the law in order to meet such ridiculous standards as stated above. Los Angeles attorney Feuer started exploring the bank in the wake of a report, in which a few previous
Based on information provided by the financial institution, one could infer that Wells Fargo has a corporate culture that empowered its employees to put their own interests ahead of its customers and a “sales at all costs” culture provided the backdrop for the deed. It seems the underlying cause for the unauthorized accounts with customers’ monies was a sales culture that provided an incentive structure that rewarded employees on the more products they sold. Some employees did not open accounts requested by customers and, instead, accumulated a number of account applications to be opened at a later date. This is called “sandbagging.” Another example is some employees would tell customers that certain products were only available as a package
Wells Fargo is accused of creating over two million fake deposits and fake credit card accounts starting in 2011 (Blake, 2016). This was done to make the company look more appealing. This means that all these accounts and credit
Wells Fargo has been in the news lately. Thanks to the scandal surrounding reports that bank employees have opened accounts without client’s approval. As a result, Wells Fargo’s share price has taken a beating, losing 14% of its market value for the year. Berkshire Hathaway is the bank’s biggest shareholder with almost 10% stake. Its famous CEO, Mr. Warren Buffett is known as a long-time WFC fan, even praising the bank’s untarnished ethical culture.
The employees also opened credit cards for customers and those actions lead customers to have financial difficulty as they have gone to debt collectors and have had issued with their credit reports showing inaccurate information. The consequences of the employee’s actions caused many to lose their jobs as well as resulting in hefty fines for Wells Fargo Co. Customers were outraged and understandably felt that their assets were not safe with the firm. The Wall Street Journal explains, “The top executive of Wells Fargo & Co. is expected to tell a
The Wells Fargo Fake Accounts Scandal In September 8, 2016 the US Consumer Financial Protection Bureau announced that, Wells Fargo is going to pay a combined amount of $185 million fine to the (C.F.P.B.), the Office of the Comptroller of the Currency and the City and County of Los Angeles to settle charges of being engaged in illegal practices of opening two million fake accounts between May 2011 and July 2015. So what exactly happened is that at Wells Fargo employees to reach the sales goals set by the bank executives had open more than 1.5 million deposit accounts and more than 565,000 credit-card accounts without the customer’s consent. Customers were charged fees, had collection agencies calling them due to unpaid fees on accounts
Conversely, Wells Fargo’s recent fake accounts scandal proves that employee motivation without engagement leads to negative behavior that hurts both the company and the customers in the long run. An overly aggressive sales incentive plan, which was vehemently enforced by management, pushed employees to reach a sales quota of eight accounts per customer. This unrealistic quota put so much pressure on employees that they felt compelled to lie or fake sales to keep their jobs. A weak corporate culture based on lies and manipulation of customers quickly spread in Wells Fargo branches all across the country.
Wells Fargo has put a lot of work on damage control in order to rebuild trust with its clients. Although employees were the one committing misconduct, the company as an entity is legally answerable to the
Wells and Fargo still decided to start their own business while continuing to tend to their responsibilities at American Express. They created
Moving forward with this option rebuilds trust and establishes long-term sustainability. Rebuilding trust with the customers of Wells Fargo after previous scandals can show the genuine commitment to the bank, regaining credibility. Focusing on ethical conduct is an essential aspect of a business trying to achieve long-term sustainability. By prioritizing the integrity of the business instead of quick profits, Wells Fargo can eliminate future scandals and penalties from occurring, as well as safeguard its reputation. Implementing Option B also ensures that Wells Fargo is compliant with regulations and can avoid costly fees relating to unethical practices, saving the company money.
JPMorgan Chase Bank has faced several lawsuits in recent years. They have been hit with cases concerning fraudulent misrepresentation, bribery, and many things in between. By studying the accusations the company has faced, one receives a better understanding of who is really handling their money. An act of fraudulent misrepresentation cost JPMorgan the fine of a lifetime.
The Wells Fargo scandal was the creation of more than 2 million fake accounts. Which were opened in customer’s names, but customers didn’t know they even had these accounts opened. The people who opened theses unauthorized bank and credit card accounts were Wells Fargo employees who created millions of accounts. The phony accounts earned the bank unwarranted fees and allowed Wells Fargo employees to boost their sales and make more money. These fake accounts led to many problems for customers who were impacted.
The then CEO John Stumpf was forced to resign following insurmountable political and public pressure. Federal prosecutors also issued subpoenas and congressional hearings were held, for which then CEO John Stumpf attended. Additionally, on February 21, 2017, Wells Fargo terminated four high level executives involved in the scandalous news. The SEC’s investigation consists of warrants against bank executives for possible violations of GAAP principles and the Sarbanes-Oxley Act for inaccurate accounting practices. The SEC will probe possible violations of employee whistleblowing protection under the Sarbanes-Oxley and Frank-Dodson Act.
