Financial Fraud and Breach of Trust at Wells Fargo
Founded in 1852, Wells Fargo serves as a pioneer in the financial service industry having relation with some of America’s most pivotal historical events. In September of 2016, Wells Fargo’s reputation was damaged greatly when the public was informed of a scandal consisting of approximately 2 million personal bank accounts. This happened through employees opening these unauthorized accounts without their customers knowing. There are many factors that led up to this happening and ultimately becoming a widespread scandal. This was not the result of one person in wrongdoing, but a whole workforce with a competitive mindset and very little relationship with the business ethics and values that should have been in place. We will look at what types of behavior caused this type of fraudulent activity, as well as the rights of customers and employees of banks. Also, what can Wells Fargo do to restore stakeholder trust and confidence?
The history of Wells Fargo will help uncover the events that led up to the scandal and it finally becoming public in 2016. Wells Fargo had been struggling since 2011, in which it was the same year the Consumer Financial Protection Bureau (CFPB) was founded. This may not be a coincidence, although “questionable business practices” dated back to 2002. The company even had a whistler-blower leave in 2011 claiming employees had been opening unauthorized accounts and when reported to superiors she was fired. By 2013 an investigation was opened after more whistle blowers came forward. And as mentioned, by September of 2016 the scandal became public.
What could have caused this fraudulent wrongdoing? Wells Fargo was focused on their employees more than they were on their own customers. The company promoted a competitive community and environment that offered incentives that “incentivized not caring.” There was a commission based structure in the company which led to not employees being selfish, but employees acting as they did in fear of losing their job. These practices did not correspond to corporate values. The incentives shaped the companies culture. However, the employees are not at complete fault for what happened. An independent investigation by the board of director took place with very little...