Company Culture Scandal Wells Fargo has been a trusted bank by many Americans across the country, but the recent scandal has caused many to question the company’s ethics and culture. In recent weeks, there has been an abundance of time spent questioning Wells Fargo for illegal activity within the bank. The chief executive of the company John G. Stumpf did not believe the company was to blame, but that the employees were responsible for the scandal (Cowley 1). An article published by the New York Times, written by Stacy Cowley, discusses the opinions that others had towards Stumpf and the poor leadership he displayed in leading the company, and the ethical standards being held in within the company. This is an important issue in the business …show more content…
The company’s employees were illegally opening bank and credit card accounts in the names of actual customers. It is believed that employees were doing this in fear of not meeting their sale goals. Cowley explains the activity as being a criminal enterprise (Cowley 1). This refers to a large scale group that is responsible for long-term and elaborate drug conspiracies. The idea proves to be accurate because this is not the first time Wells Fargo has been questioned because there have been investigations going back to 2011. As they looked further into the company Stumpf continued to get questioned on the problem at hand. He stuck to the same idea throughout the investigation, but assured that they were looking into how serious the problem was, and exactly how far it goes back, which is believed to be as far as 2007. Mr. Stumpf expressed how sorry he was for the mistake his company made, and claims to take “full responsibility” for the mistake (Cowley 1). Although Stumpf wants to …show more content…
Stumpf experienced many draw backs to the scandal that occurred. The board of directors took back $41 million in unvested stock awards. Stumpf also lost out on his annual yearly bonus, as well as losing part of his $2.8 million salary. Carrie L Tolstedt, head of retail banking operations will also lose $19 million in compensation. Threw the whole process of the trial, Mr. Stumpf stuck to his story, this issue occurred because of the large amount of low level bankers and tellers who have a history of being fired for actions, as in not reaching sales goals. Lawyers questions Stumpf when they found evidence that supported the hypothesis of the bank creating false accounts further back then they admitted to. I look at this to be an issue in leadership. The head of a company should know what is going on within every aspect of the company and make it a priority to promote good ethics in every employee. Mr. Stumpf said that he leads the company with courage, and says this with
Based on the contingency continuum theory the bank was on the pure accommodation side by doing full apology, by being honest and communicating it to the public. " Stumpf, who will testify at the Sept. 20 hearing, said he was sorry about the scandal. “We deeply regret any situation where a customer got a product they didn’t request,” Stumpf said during an appearance on CNBC’s “Mad Money” on Tuesday." (Puzzanghera, 2016). Then, always following the apology and restitution strategy Wells Fargo put his public first by doing paying full compensation to them. According to Egan, Wells Fargo has reached a $110 million preliminary settlement to compensate all customers who claim the scandal-ridden bank opened fake accounts and other products in their name. Furthermore, they also did some corrective actions by eliminations retail sales goals. “The elimination of product sales goals represents another step to reinforce our service culture, helps ensure that nothing gets in the way of our ability to achieve our mission and is consistent with our commitment to providing a great place to work,” he said. The sales goals will be eliminated starting Jan. 1, Wells Fargo said." According to Puzzanghera, 2016. Concerning, the corrective action the bank went beyond the elimination of retail sale goals they also fired some employees, paid their fined toward the regulatory bodies including the Consumer Financial Protection Bureau(CFPB) and the
Key stakeholders are owners, directors, employees, and the community that the organization draws it resources businessdictionary.com,2016). Out of the 1000 Wells Fargo customers that were surveyed 3% stated that they were personally affected by the scandal and 14% of them stated that they have changed banks while 30% of them were currently looking to switch. Studies predict that Wells Fargo could lose about $99 billion in deposits and $4 billion in revenue because of customers rejecting to do business. Individual customers weren’t the only ones that were affect by the scandal but similarly 10,000 small businesses (Razin, 2016). I believe that the owners will be affected as well because of profit losses that will eventually affect Wells Fargo shares and the employees were affected after 5,300 of were fired (Razin,
From big financial and ethical scandals like Enron to WorldCom, Wells Fargo may be the next big financial and ethical scandal. Wells Fargo is one of the leading banks and credit lending companies in America. Now, they’re on a slippery slope downhill to one of the worst—and most unethical—banking and credit lending companies in America, maybe even in the world. Wells Fargo has been in an ethical uproar, has questionable ethical values, and questionable principles and practices in culture due to their downhill ethical standards. The company may have been influenced by bad stakeholder judgment, and are now struggling to maintain the company’s culture.
This case is based on Mrs. Jennifer Sharkey, who sued J.P. Morgan & Co. (JCMC), Mr. Kenny, Mr. Green, and Mrs. Lassiter, alleging breach of contract and violations of the SOX anti-retaliation statute. The facts started when Mrs. Sharkey was assigned to a Suspect Client 's account where members of JPMC expressed to her their concern regarding to this account because they suspected that the Suspect Client was involved in illegal activities. After Mrs. Sharkey’s investigation, she claimed that she informed her conclusions to superiors Mr. Kenny, Mr. Green, and Mrs. Lassiter, of the Suspect Client 's potential unlawful activities, such as: money laundering, mail fraud, bank engaged in fraud, and violations of federal securities laws. After
Corporate crime has become increasingly common over the past couple of decades. It seems that every big corporation today has some type of dark side. With the constant trials against corporate officials it seems that many high profile companies can no longer be trusted. We can no longer look at our banks the same either; JPMorgan Chase in the recent two years can be added to corporate crime list. They have committed crimes against its costumers and the government by rigging their bids for investments for years, improper home insurance rates, and overcharging military veterns. From this they stole millions of dollars to put in their pockets. What makes this case interesting is that Chase is one of the top banks in this country. Millions of Americans trust this bank with their life savings it turns out they trusted their money with criminals.
The L.A. Times reported the unethical business practices in 2013, and aided in exposing the fraud. This report directed to a 2015 lawsuit against Wells Fargo by the city of Los Angeles. They were fined $185 million and Wells Fargo terminated 5,300 employees, nearly 1% of the U.S. workforce. Therefore, the federal regulators got involved and this resulted in WF announcing they were going to pay the $185 million fine. The purpose of the announcement was the bank’s executives wished to have the matter behind them. However, due to the firing of the employees and creating the fake accounts, it caused a public uproar and caught the government officials attention (the U.S. Senator Elizabeth Warren and U.S. Treasure Secretary Jack Law). They scolded Wells Fargo for the misconduct and asked John Stumpf to resign. Though, Stump wanted to continue and lead the team to success. In addition, a former consumer banking chief, Carrie Tolstedt, who had resigned during the summer and reportedly collected $125 million. She ran the unit that was responsible for the millions of fake accounts may be have million dollars in penalties. However, since she decided to retire in July, there are no indication that she will face any
Another problem was that L. A. (BBB) president William Mitchell was receiving a salary of $400,000 a year for a nonprofit organization. Sales Representatives were getting commission for the sales of memberships. These were some of the worst ethical and morals that a company that was supposed to help the consumer could do. Restoring the trust to the public was being made difficult by a
First of all, they will not be able to buy tangible properties such as house, car and etc. because of that their credit ratings got a huge hit. Moreover, only 5,300 of the employees that were fired from the Bank, 10% were Managers. What could have motivated them to engage in this sham? This is not an attempt to imply all were of malicious but certainly most them led the way. The aggressive sales goals pushed employees to break the rules. “On average one percent 1 percent of employees have not done the right thing, and we terminated them. I don’t want them here if they don’t represent the culture of the company,” says John Stumpf, the company’s longtime chief executive, in an interview with The Washington Post. It is obvious that simple employees and managers could not break the law if someone from the top did not allow them to do so. But the executive board of Wells Fargo claimed that they only fired 1 percent of below employees and some managers for fraudulent accounts, however they also might be involved in that business crime although to build a case against a company executive, prosecutors would have to show “they knew there was a plan to create false accounts to drive up sales,” said Brandon L. Garret, a professor at the University of Virginia School of Law. Even if it appears that the executive purposefully attempted to avoid knowing about the fraud, prosecutors may be able to build a case. Because they don’t have to participate if there is willful
Although many of her actions were parallel with fellow manager in General Accounting Troy Nordmand’s, he did not receive a prison sentence due to the fact that he attempted to leave the company (although Vinson did initially plan to resign). Conversely, Vinson was sentenced to five months in prison and five months of home detention. One particularly interesting aspect of Betty Vinson’s case is the inclusion of her concerns over taking home pay and having health insurance, in addition to the fact that she had a positive reputation and was known for doing “anything you told her”. While it is normal to have concerns over job security, the emotional appeals in her situation add a different side to the story. One could argue that she is a victim -- she could have been targeted due to her reputation, or that fear drove her to do things she otherwise would not have considered. The issue here, however, is that she facilitated the fulfillment of Sullivan’s requests and pleaded guilty to one count of securities fraud and one count of conspiracy to commit securities fraud. As far as the case specifies, despite any superior’s knowledge of Vinson’s tendencies, she was not absolutely forced to do or not do anything. Because she committed the crime and pleaded accordingly, the criminal charges and consequent sentencing was both expected and
One of the most recent white-collar crime involved Wells Fargo, a banking and financial services provider. In 2016 San-Francisco based bank Wells Fargo (WFC) employees secretly created millions of unauthorized bank and credit card accounts without permission of their customers. Opening about 1.5 million fraudulent deposit accounts and submitting 565,443 credit card applications allowed Wells Fargo employees to boost their sales targets and receive bonuses. Consequently, customers were wrongly charged fees for accounts they did not know existed. In this business crime scenario, Wells Fargo involved to pay $185 million in fines and refund $5 million to affected customers. Also, around 5,300
His project manager, Oliver Freeman, changed the analysis. that Daniel submitted in order to get a clear opinion so that their firm may get an exclusive account. The. My decision was to report the incident so that the correct information would be supplied in the audit documents. The decision I chose may cost Baker Greenleaf to lose an important client and Oliver Freeman to lose his job, but it will uphold the integrity of the accounting profession and keep Daniel Potter safe from the liability of providing false information.
In this paper I will identify and analyze the Wells Fargo scandal as it pertains to the breakdown of leadership and ethics. I will first identify and analyze the event and discuss the challenges and conflicts the scandal presented. Then I will evaluate the issue by explaining why the issue has interest and concern to stakeholders followed by discussing the challenges presented to individuals and/or organizations around this case. Lastly, I will recommend action steps that should be taken to those involved as well as discuss what I have learned from exploring this topic.
During the past year Wells Fargo, a well-recognized bank of the United States, has been trying to clean its name and the mess it got itself into, when it was brought to the public that the bank was involved in generating fraudulent checking and savings accounts for its clients without their knowledge or their authorization. “The way it worked was that employees moved funds from customers' existing accounts into newly-created ones without their knowledge or consent”
They were committing fraud by creative accounting, acting illegally when using insider trading and shredding their documents relevant to the investigation. Next, consider the stakeholders. Anyone who owns stock in the company would suffer, along with every employee. Under the values bullet we can assume that they have none. Greed and power got the better of every one of them.
Recently, three individuals were awarded $170 million for helping investigators gather a record $16.65 billion penalty against Bank of America. Based on their action of inflating the value of mortgage properties and selling defective loans to investors. By influencing the market falsely is unethical and wrong. That is also why their punishment was so harsh. Firms today warn their managers and employees that failing to report unethical behavior and violations by others, could get them fired.