It began by hackers stealing the user name and password of a current Chase Bank employee. Chase Bank had previously updated their security to use a two-factor authentication, which requires a second password when accessing secure data. However, one of the network servers was inadvertently not updated which allowed for the hackers to gain access. This oversight of one server, left a room for the hackers gain access to over 90 of its servers containing proprietary information. ("Neglected Server Provided Entry for JPMorgan Hackers - The New York Times," n.d.)
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
Wells Fargo & Company is a publicly traded company that provides banking and financial services. This company was founded by Henry Wells and William Fargo in March 18, 1852 in New York, New York and third largest bank in the country. Today’ the headquarters are in San Francisco, California and John G. Stumpf as Chairman and CEO. Wells Fargo offers a large range of products that include, Consumer banking, corporate banking, credit cards, finance and insurance, foreign currency exchange, investment banking, mortgage loans, private banking, private equity, and wealth management. This company doesn’t only serve the United State; it also serves a multinational range.
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
The Wells Fargo scandal included the creation of fake banking accounts, savings accounts, and credit cards. People who were employed at the bank opened these accounts in order to meet goals and make profit. When the fake accounts were discovered 5,300 employees were fired. However, the problem went beyond the fired employees.
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
Employees began using personal information and the funds of current customers to open additional accounts and credit cards without their knowledge to reach sales quotas and earn bonuses. An estimated 3.5 million fake accounts were created within five years, which has cost the company its reputation, countless
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.
Consequently, the fake account scandal had been exposed to the public in 2016. Wells Fargo committed the fraud and was agreed to pay 185 million USD, settling the penalties made by government regulators which contained 35 million USD by the Office of the Comptroller of the Currency, 100 million by the Consumer Financial Protection Bureau and 50 million by the Los Angeles City Attorney. The company also announced that 5300 low-level employees who created the new accounts without approved by customers, were fired due to the unethical behaviour. Wells Fargo changed the performance measurement on its compensation program to avoid unethical behaviour of employees. Wells Fargo rebuilded the operational structures to regain the trust from customers
Wells Fargo & Company, incorporated on January 24, 1929, is a bank holding company and a diversified financial services company. The Company has three operating segments: Community Banking, Wholesale Banking, and Wealth and Investment Management (Reuters, n.d.). Wells Fargo and Company operates in three segments, community banking, wholesale banking, and wealth and investment management while providing retail, commercial, and corporate banking services. Well Fargo and Company is headquartered in San Francisco, California and is considered the nation’s leader in add-on services to its customers by selling financial products such as checking and savings account, credit cards, mortgages, and wealth management (Reckard, 2013). How did this respected
early stages of the scandal, the San Francisco based financial institution was investigated by the local Los Angeles City’s Attorney and California state officials. Preliminary investigations revealed the extent of the fraud and malpractice predated as far back as 2011. As a result, on September 8, 2016, federal investigators followed suit and the Consumer Financial Protection Bureau Agency opened an investigation against Wells Fargo and handed a $185 million penalty to settle the dispute. This settlement would become the largest fine levied in the agency’s history. Of the $185 million, $100 million comprised of fines from the Consumer Financial Protection Bureau (CFPB), $50 million originated from the Los Angeles City Attorney’s Office, and
Now in regards to some of the information that will be used by each of the parties to influence Wells Fargo, there are a couple that come to mind, specifically relating to some of the issues and challenges that the company has been facing or could be facing. Now just as a reminder, some of the issues that the company has faced over the years that are still going on today include: opening unauthorized accounts for customers and transferring funds to them from other accounts, submitting applications for credit/debit cards in the customer’s name without their consent or knowledge, enrolling customers in online banking without their request, and emptying the customer’s bank account. While other challenges that the company could face include things
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.
According to this article, “ Chase Bank has admitted to the presence of a technical bug on its online banking website and app that allowed accidental leakage of customer banking information to other customers.” This shows us that even perfect systems can be faulty. This can also connect back to consumers because not only were they the victim in this situation but they have to go out of their way and dedicate time and money back into fixing their financial situation because of the recklessness of Chase Bank. The impact this left on the consumers was a perfect example that they should not be totally reliable on technology. In this article it states, “BleepingComputer has asked Chase specific questions including how many customers were impacted by this issue and what was its cause.
Wells Fargo is a well know bank and financial service company in the United States who takes diversity to the next level. “Meeting the increasingly diverse needs of Wells Fargo’s global customer base is critical for our company’s long-term growth and success. We’re committed to advancing diversity
