The Wells Fargo Scandal

1220 Words3 Pages
bulb-icon

Recommended: Scandal

The Wells Fargo scandal is one of the well-known scandals that happened recently. Wells Fargo currently has over 70 million customers; however, that number used to be much larger before the scandal occurred (“Wells Fargo Today,” 2017). The Wells Fargo scandal was approached through many preceding events within Wells Fargo. The scandal seemed to have started by the CEO of Wells Fargo, John Stumpf, through his repetition of getting eight Wells Fargo products into the hands of each customer. Since meeting these goals was difficult and the employees wanted to meet their quotas, this caused some of the Wells Fargo employees to do whatever they had to do in order to meet their goals and quotas. Because of this, employees created new deposit accounts, …show more content…

There are two main problems that led up to the scandal. The first problem is that the CEO of Wells Fargo at the time, Stumpf, was pressuring the employees to meet specific and almost impossible sales goals. Stumpf made it seem like the employees must meet the goals he expects otherwise there will be consequences (“Wells Fargo Fake Accounts,” 2017). The first problem of Stumpf pressuring the employees ties into the second main problem of why and how this scandal occurred. The second problem is that because Stumpf pressured the employees to meet goals, the employees felt that they needed to meet those expected goals no matter what it takes. In result, many employees created fake accounts and set up credit cards illegally because the employees did not let the customers know what they were doing and did not get the permission from customers to do so (“Wells Fargo Fake Accounts,” 2017). The evidence that I have to support the identification of these problems include credible sources through online databases, journal articles, and more specifically Forbes, Fortune, and Wells Fargo online websites. This is a very well-known scandal that occurred recently so in the future I know that there will be even more evidence that ties to the scandal, but there is a lot of relevant and reliable information about this scandal that occurred a little over …show more content…

Fraudulent bank accounts and credit cards were created without the approval of the customers, which is the main reason behind what caused the Wells Fargo scandal. Even though the company has suffered a significant loss of money and customers, Wells Fargo is on the right track for restoring its reputation and trust. Through appointing a new CEO, publicly apologizing, paying back customers the money from setting up fake bank accounts, and paying the fines that Wells Fargo owed, the company is starting to get back on its feet. The role of the five dysfunctions: absence of trust, fear of conflict, lack of commitment, avoidance of accountability, and inattention to results, helps us understand the underlying problems at Wells Fargo because Wells Fargo can be considered a dysfunctional team after dealing with this scandal, which helps us realize the ways that a team could become dysfunctional. In the case of the Wells Fargo scandal, the company is considered dysfunctional because all five of these dysfunctions were present through the problems that led up to the

Show More
Related

  • Scott Welch and the Defrauding of Wachovia

    1074 Words  | 3 Pages

    So just how did Scott Welch fit the profile of the average perpetrator? Based off the information reported by the Association of Certified Fraud Examiners’ (ACFE) 2010 Report to the Nation, Welch fit directly into the median for a perpetrator – he was male, between the ages of 46 – 50, had a tenure of at least 6 – 10 years, an executive position as a Vice President. According to the ACFE’s report a perpetrator’s position within the company, age, tenure, gender and education level all have a have consideration in a fraud. In the 2010 report, it is noted that 66.7% of all frauds are perpetrated by men, more than likely due to the fact that more men hold a position of authority. Of the cases studied, 74% of all managers and 88% of all owners/executives were men (Association of Certified Fraud Examiners (ACFE), 2010). The combination of Welch’s tenure and authoritative position may have exacerbated the losses suffered by Wachovia and may also have helped him hide the fraud from detection for an extended period of time of eight years (“Former Wachovia,” 2011). This period is well above and beyond the 24 months reported by the ACFE as the median time frame in which frauds perpetrated by executives/owners were detected (ACFE, 2010). Taking into consideration all the kn...

    Read More

  • Scandal Wells Fargo Scandal

    980 Words  | 2 Pages

    Wells Fargo account fraud scandal One of the most recent white-collar crimes 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 is involved in paying $185 million in fines and refunding $5 million to affected customers.

    Read More

  • Wells Fargo Ilunt Fraud Scandal

    1019 Words  | 3 Pages

    As Wells Fargo convicted all the requirements of fraud they are involved to the business crime called fraud, they are liable to their fraud crime. There was a false statement which respectively conducted to the injury to the alleged victim as a result. Wells Fargo has been ordered to pay $185 million in fines, but that's a pittance compared with the $5.6 billion the bank earned in just the second quarter of this year. Meanwhile, the bank's victims weren't just nickel-and-dimed with overdraft and maintenance fees. Many of them took "significant hits" to their credit scores for not staying current on accounts they did not even know about. They will likely have difficulty securing home and car loans at reasonable rates for years to come, simply because their bank decided to defraud

    Read More

  • The Wells Fargo Crisis: The Comptroller Of The Crisis

    1079 Words  | 3 Pages

    Employees were using the cross-selling which is a concept of attempting to sell multiple products to consumers. This concept led to fraudulent actions, in fact employees were encouraged to order credit cards for pre-approved customers without their consent, and to use their own contact information when filling out requests to prevent customers from discovering the fraud. " The Wells Fargo scandal was far different. Instead of a select few doing bad things, the unethical behavior was widespread at the bank, with thousands of employees engaged in secretly creating new bank and credit-card accounts for customers without their knowledge, resulting in overdraft and other fees." (Kouchaki, 2016). According to the Los Angeles City Attorney, employees were opening and funding accounts without customers' permission or knowledge in order to "satisfy sales goals and earn financial rewards under the bank's incentive-compensation program." This means that the board members of the bank were aware of that it wasn't by the employees' own wills. In fact, they were pressured by aggressive goals and performance which led them to immoral behaviors. Facing this problem, Wells Fargo bank had to take some measures to avoid bankruptcy, losing customers, or loosing brand

    Read More

  • The Enron Disgrace

    2858 Words  | 6 Pages

    ...FO at the Houston airport. While Mr. Fastow's parents were undergoing a random search, he stopped to chat with Mr. Schwieger. "I never got an opportunity to explain the partnerships to you," he said, according to Mr. Schwieger. Mr. Schwieger replied, "With everything that has come to light, I probably wouldn't like the answer I would have gotten."

    Read More

  • The Financial Scandal Involving David Durenberger

    1200 Words  | 3 Pages

    Corruption is an individual and institutional process where there is a gain by a public official from a briber and in return receives a service. Between the gain and the service, there is an improper connection, (Thompson p.28). The two major categories of bribery is individual and institutional corruption. Receiving personal goods for the pursuit of one’s own benefit is personal fraud. An example of individual distortion is the financial scandal involving David Durenberger. Organizational corruption involves “receiving goods that are useable primarily in the political process and are necessary for doing a job or are essential by-products of doing it,” (Thompson p.30). An instance of institutional fraud is the Keating Five case. There are also times where there is a mixture of both individual and organizational corruption in a scandal. An example of this diverse combination is James C. Wright Jr. actions while he was the Speaker of the House.

    Read More

  • The Corporate Culture In Enron's Case

    436 Words  | 1 Pages

    The CFO, Andrew Fastow, systematically falsified there earnings by moving company losses off book and only reporting earnings, which led to Enron’s bankruptcy. Any safeguards or mechanisms that were in place to catch unethical behavior were thrown out the window when the corporate culture became a situation where every person was looking out for their own best interests. There were a select few employees that tried to get in front of the unethical accounting practices, but they were pushed aside and silenced. The corporate culture at Enron became a place where if an employee would not make unethical decisions then they would be terminated and the next person that would make those unethical decisions would replace them. Enron executives had no conscience or they would have cared for the people they ended up hurting. At one time, Enron probably was a growing company that had potential to make a difference, but because their lack of social responsibility and their excessive greed the company became known for the negative affects it had on society rather than the potential positive ones it could have had. Enron’s coercive power created fear amongst the employees, which created a corporate culture that drove everyone to make unethical decisions and eventually led to the downfall and bankruptcy of

    Read More

  • Analysis Of Jpmorgan Chase, Bailouts, And Ethics

    601 Words  | 2 Pages

    Jake Clawson Ethical Communication Assignment 2/13/2014. JPMorgan Chase, Bailouts, and Ethics “Too big to fail” is a theory that suggests some financial institutions are so large and so powerful that their failure would be disastrous to the local and global economy, and therefore must be assisted by the government when struggles arise. Supporters of this idea argue that there are some institutions that are so important that they should be the recipients of beneficial financial and economic policies from government. On the other hand, opponents express that one of the main problems that may arise is moral hazard, where a firm that receives gains from these advantageous policies will seek to profit by it, purposely taking positions that are high-risk, high-return, because they are able to leverage these risks based on their given policy. Critics see the theory as counter-productive, and that banks and financial institutions should be left to fail if their risk management is not effective.

    Read More

  • The Bernard Madoff Investment Scandal

    2631 Words  | 6 Pages

    Bernard Madoff had full control of the organizational leadership of Bernard Madoff Investments Securities LLC. Madoff used charisma to convince his friends, members of elite groups, and his employees to believe in him. He tricked his clients into believing that they were investing in something special. He would often turn potential investors down, which helped Bernard in targeting the investors with more money to invest. Bernard Madoff created a system which promised high returns in the short term and was nothing but the Ponzi scheme. The system’s idea relied on funds from the new investors to pay misrepresented and extremely high returns to existing investors. He was doing this for years; convincing wealthy individuals and charities to invest billions of dollars into his hedge fund. And they did so because of the extremely high returns, which were promised by Madoff’s firm. If anyone would have looked deeply into the structure of his firm, it would have definitely shown that something is wrong. This is because nobody can make such big money in the market, especially if no one else could at the time. How could one person, Madoff, hold all of his clients’ assets, price them, and manage them? It is clearly a conflict of interest. His company was showing high profits year after year; despite most of the companies in the market having losses. In fact, Bernard Madoff’s case is absolutely stunning when you consider the range and number of investors who got caught up in it.

    Read More

  • The Merger Between Wells Fargo and Wachovia Bank

    2033 Words  | 5 Pages

    It is proper to present a business definition of merger as it found on legal reference with the ultimate goal in the pursuing of an explanation on which this paper intents to present. A merger in accordance with the textbook is legally defined as a contractual and statuary process in which the (surviving corporation) acquires all the assets and liabilities of another corporation (the merged corporation). The definition go even farther to involve and clarify about what happen to shares by explaining the following; “the shareholders of the merged corporation either are paid for their share or receive the shares of the surviving corporation”. But in simple terms is my attempt to define as the product or birth of a corporation on which typically extends its operation by combining with another corporation. So from two on existence corporations in the process it gets absorbed into becomes one entity. The legal definition also implied more than meet the eye. The terms contractual and statuary, it implied a process on which contracts and statuary measures emerge as measures to regulate, standardized, governing or simply at times may complicate whole process. These terms provide an explicit umbrella and it becomes as part of the agreement formulating or promoting a case for contracts to be precedent, enforced or regulated in a now or in the future under a court of law under the Contract Business Law Statue of Practice. As for what happens to the shares of the involved corporations no more explanation is needed as the already actions mentioned clearly stated of the expectations of a merge’s share involvement.

    Read More

  • The Virtuous Manager

    1642 Words  | 4 Pages

    Enron’s management style was apparent from the early years of the organization. In 1987, traders in New York manipulated transactions so it would appear as though volume was higher. Falsified transactions significantly increased the traders’ bonus pay out. A truly virtuous manager would deal with unethical behavior by swiftly dismissing those involved. Sadly, Chairman Kenneth Lay and his management team chose to keep the traders on payroll because “said the company needed the revenue” (Fowler, 2002). This event may have been the earliest indication of unethical behavior within the organization.

    Read More

  • Better Business Bureau Scandal

    406 Words  | 1 Pages

    The driving force that established the Better Business Bureau (BBB) was Samuel C. Dobbs a sales manager for the Coco-Cola. The company was on trial for false advertising. In 1909 Dobbs became the president of Associated Advertising Club of America. The legal counsel for the Coco-Cola company made a statement “all advertising is exaggerated. Nobody really believe it.”

    Read More

  • Analysis Of Wells Fargo Scandal

    1308 Words  | 3 Pages

    The Wells Fargo scandal started in 2016 when it came to light that starting back in 2011 employees created over 1.5 million fraudulent bank

    Read More

  • Movie Analysis Of Enron

    2182 Words  | 5 Pages

    Enron was a Houston based energy, commodities and services company. When people hear the name Enron they automatically associate their name with one of the biggest accounting and ethical scandals known to date. The documentary, “Enron: The Smartest Guys in the Room,” provides an in depth examination of Enron and the Enron scandal. The film does a wonderful job of depicting the downfall of Enron and how the corporate culture and ethics were key to Enron’s fall. As the movie suggests, Enron is “not a story about numbers, it is a story about people.”

    Read More

  • The Enron Corporation Case Study

    1339 Words  | 3 Pages

    Through an organizational culture that focused on financial greed for self, illegal accounting practices, conflicts of interest partnerships, illegal business dealings, fraud, negligence, and massive corruption at all levels, the Enron scandal help to create new laws and regulations with stiff penalties if violated (Ferrell, et al, 2013). The federal government implemented the Sarbanes Oxley Act (SOX) (Ferrell, et al, 2013).

    Read More

More about The Wells Fargo Scandal

Open Document