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What Is Wells Fargo Unethical

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Wells Fargo was a top earner in the banking industry and was growing quickly at the start of the century with large acquisitions like Wachovia Bank in 2008 (McFarlane, 2022). However, Wells Fargo’s shining castle would topple down as the company became involved in a multitude of scandals, causing its stock to drop billions of dollars in market value (McFarlane, 2022). Wells Fargo’s rap sheet makes for a great case study, questioning the role of corporations in society and a case for ethical corporate responsibility. This analysis will examine Wells Fargo’s corporate culture, understanding why it created the conditions for unethical behavior, why safeguards failed, and how these pitfalls can be avoided. In 2013, the L.A. Times reported on Wells …show more content…

The U.S. Securities and Exchange Commission (2018) also found that Wells Fargo was encouraging customers to improperly trade investment products, which generated large fees for the bank and diminished returns for the customers. Wells Fargo’s new CEO, with only three years in service, stepped down from the position in 2019, and the corporation wisely decided to hire an external candidate to fill the position. What transpired at Wells Fargo is much like what has been documented and said about sustainability goals: the key to meeting sustainability goals is to have leadership that is committed and active in meeting those goals, not just paying lip service because the marketing department says it will generate sales (Russel Reynolds Associates, 2020). The corporate culture at Wells Fargo was one that encouraged increasing profits at any cost, even if it meant deception. This is a culture that was spearheaded by company leadership, a leadership that finds it acceptable to publicly say one thing and do another behind closed doors to pressure employees into doing what goes against their morals and dispose of those who don’t play along with the

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Ms. Tolstedt decided to retire in July, 2016 when the investigation was moving toward finality. Wells Fargo allowed Ms. Tolstedt to retire and take with her around $125 million in stock options while around 5300 of her former employees are getting fired for their part of the fraudulent activities. The author feels Wells Fargo did an injustice to society and Ms. Tolstedt’s former employees by allowing her to retire and take all of her stock options with her, since she should have been

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727 Words | 3 Pages

In the article Wells Fargo’s Reaction to Scandal Fails to Satisfy Angry Lawmakers it mentions how lower-level employees were mainly affected by this unethical behavior and that more than 5,300 employees had been fired due to the unethical practice. Some employees were fired that did not participate in the unethical practice during the scandal were affected as well as a result of not being able to attain the sale goals. Stated in the article, How The Wells Fargo Phony Account Scandal Sunk John Stumpf, “Two former employees filed a $2.6 billion class action suit, alleging branch workers were unfairly fired when they could not meet Wells' aggressive sales quotas.” Customers also suffered because they trusted this bank and its employees to do their job right and they were taken advantage of.

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This breach of trust resulted in financial harm and fees imposed on numerous unsuspecting customers, highlighting the profound ethical lapses within the bank. Wells Fargo's crimes underscore the imperative for rigorous oversight to uphold legal standards. The scandal not only revealed the severe consequences of failing to enforce proper regulations, but also

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“Former Wells Fargo executive avoids prison in fake-accounts scandal.” Reuters, 15 September 2023, https://www.reuters.com/business/finance/former-wells-fargo-exec-tolstedt-avoids-prison-time-fake-accounts-scandal-wsj-2023-09-15/. Accessed 20 April 2024. “The Wells Fargo Fake Accounts Scandal: A Comprehensive Overview.” Learnsignal, 6 January 2023, https://www.learnsignal.com/blog/wells-fargo-fake-accounts-scandal-overview-2/. Accessed 20 April 2024. “Wells Fargo Whistleblower Retaliation Leads To $22 Million OSHA P.” The National Law Review, 22 November 2022, https://natlawreview.com/article/osha-orders-wells-fargo-to-pay-22-million-to-wrongfully-discharged-whistleblower.

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According to Fortune, “Executives sought to drive growth by putting undue pressure on its employees to hit sales quotas, and many employees responded by fraudulently opening customer accounts. In most cases these accounts were closed before customers noticed, but in other cases consumers were hit with associated fees or took hits to their credit ratings. The bank was forced to return $2.6 million in ill-gotten fees and pay $186 million in fines to the government. But the biggest hit Wells Fargo will take is to its reputation, as the media and government officials spent much of the year slamming the bank for its fraud,” (Mathews). The victims being the unknowing customers who saw their credit ratings plummet and faced steep financial fees, that were brought about through no fault of their own.

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193 Words | 1 Pages

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.

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are not uncommon as employees often feel pressure to succeed and meet goals that have been established. The issue arises when employees start to make unethical decisions that are in their personal best interest at the time. The goals set may have been steep and the employees may have felt they were unachievable. This did not provide the employees an excuse to truly sabotage the company as well as the name of Wells Fargo Co.

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As all this came to fruition, the bank was penalized with $185 million dollars in fines and other penalties by county and federal organizations (Blake, 2016). On top of getting slapped with millions of dollars worth of fines, Wells Fargo fired 5,300 employees that may have been involved in the scandal (Blake, 2016). Some of Wells Fargo’s top executives where asked to step down in court proceedings as well as in other meetings with federal agencies. There have also been several lawsuits filed against Wells Fargo by customers and former employees of the company that feel that they were wronged and bombarded with threats. Thankfully, this scandal did not affect most of Wells Fargo’s clients.

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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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686 Words | 3 Pages

In the following paper, I will summarize an article about Business ethics, also go into detail as to how it helped with contemporary thinking, what ethical issues the business leader faced, how I can apply the information in my field and if it matches my views of ethical behavior. Article Summary The article I have picked to review is called Enron, Sarbanes-Oxley, and the Supreme Court, A Discussion of the Lawson v. FMR. It begins by describing the fall of the Enron company, though the unethical uses of Special Purpose Entities to hide its losses by setting them up and moving any failing values to the SPE to keep the loss from the Balance sheet.

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The implementation and education of the ethical decision-making model promote moral awareness and company values that can mitigate ethical dilemmas to an extent. The aftermath was devastating for Wells Fargo not just economically but for its image. The corporation can introduce this model in training courses for new hires and current employees. Also ensuring management comprehends the prominence of ethical decisions and are aware that they are the wheels of the car, therefore, lead by example. If the corporation initially had prioritized ethical values and decision-making evaluations at every level of the business, this scandal could have been prevented at least its magnitude.

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Wells Fargo’s “Gutless Leadership” Wells Fargo is one of the largest banks in the United States, with “…more than 8,600 locations [and] 13,000 ATMs” (Wells Fargo Today). Millions of Americans trust them with their finances. However, after a federal investigation, Wells Fargo has admitted to opening up to two million accounts without customers’ permission. While this had financial implications for many customers, this scandal most heavily affected Wells Fargo’s low-level employees.

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468 Words | 2 Pages

Under this approach, an action is considered morally bad because of some characteristic of the action itself, not just because the product of the action is bad. Wells Fargo unethical practices demonstrates unethical behavior, under deontological ethical theories as its employees duty to operate in an honest and fair fashion , in providing services to the public. Wells Fargo codes of conduct does not permit sales practices of these sort, therefore the employees who participated in these practices made unethical decisions. Unfortunately there was a wrong-doing on a massive scale. The acts of unethical behavior were conducted by both the employees and management.

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Section 1: Introduction and situational analysis: In the world of business ethics, there are certain examples and scenarios that have become a commonplace for teaching aids. In the case of Enron and its eventual downfall from a perceived highly ethical and successful company. Enron was once ranked the sixth largest energy company in the world. At the height of its success, Enron seemed to be an outstanding corporate citizen, with all the social wellbeing and business ethics tools and status symbols in place (Brinkman, 2003, p. 244). However, due to a deep culture of rewarding clever strategies to bend, break laws and codes, the company eventually collapsed and filed for bankruptcy.

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A) Introduction Unethical behaviors in business affect everyone since you either work in the field or are a consumer of its services. Unfortunately, almost every company usually has individuals who act unethically whether it is for their personal benefit or for the sake of the company they work for. Unethical behaviors in business might be as simple as using company property or funds for personal gain to inside trading and financial fraud. According to The Chartered Institute of Management Accountants, nearly one third of business professionals feel pressured to compromise their ethical standards and are increasingly pushed towards unethical behavior. Moreover, “misconduct is common and accepted by business services professionals, the integrity of entire economic systems is at risk”, states Jordan A. Thomas, partner and chair of the Whistleblower Representation Practice at Labaton Sucharow law firm.

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