Introduction: Wells Fargo is the third largest bank holding business in the United States. They were established in 1852, and have been widely trusted and generally scandal free since their company began doing business (Wells Fargo, 2016). That is, until July of 2016. In 2016 it was revealed that Wells Fargo’s employees were creating fraudulent accounts in peoples’ names without their permission or knowledge. The damages were severe, and the company has had to completely rebuild their reputation. While the company received a lot of social stigma through their fiasco, their finances were surprisingly unchanged. While the company is still dealing with the publicity of the scandal, they are handling it gracefully, and with the policies that they …show more content…
However, in 2013 it is rumored that Wells Fargo started implementing harsh management tactics; the company required unrealistic numbers that were required of their employees and the employees began to open accounts without customer knowledge. These harsh management tactic included bribing employees with large bonuses if they met certain goals and even threatening punishment to those who did not meet the goals. Wells Fargo did have many precautions in place to prevent such employee behavior, however many employees engaged in the behavior anyway (Tayan, …show more content…
Branches are no longer ran as stores. Employees are no longer constantly told that “[They] will work at McDonald’s” if they do not makes quotas (Colvin, 2017). The idea is to completely change the culture at Wells Fargo. It isn’t enough to just implement a bunch of new rules and regulations for the employees to follow, the culture of the organization has to change. The company had a code of conduct with strong ethical regulations, but they were not enforced, and few followed the “rules” because the culture was not appropriate. While Wells Fargo is doing very well and growing financially, it is important to keep in mind how the public sees them. It is necessary for them to keep obtaining new customers, and to continue to create an ethical culture among the employees. It is important for them to not slip back into their old routine, and not become too obsessed with opening new accounts. It is very appropriate that they are shifting their goals toward customer satisfaction in order to please existing and new customers. Overall, Wells Fargo has been fortunate, and has handled the scandal with
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
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
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
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,
For Chase bank the mission and vision should always be clear to their customers. "At JPMorgan Ch...
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.
Legal responsibilities at Wells Fargo include a wide variety of issues. They can be from protecting customer’s rights to securing company policy. Customers trust Wells Fargo with private and privileged information. Therefore, the bank must main...
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
The management team mistakes were setting up unreachable goals for the employees, as a consequence they started conducting unethical decisions and transactions, such as opening “false accounts” and requesting friends and family members open accounts. , therefore employees could keep their jobs.
Sears, Roebuck, and Co. seemed to have the right idea when beginning their business in the late 1800s. Instead of just opening up one type of company, Sears, Roebuck, and Co. expanded from retail to insurance, real estate, securities, and credit cards (Nelson, 2007, p. 207). Until the early 1990s, the company seemed to be doing very well considering the revenue and earnings reported that equaled up to billions of dollars. Then, the company began to experience financial difficulties due to the fact that other discount retailers were coming into business. Therefore, Sears decided to implement an incentive plan to increase their profits within the auto centers nationwide (Nelson, 2007, p. 207). Once the commission based plan was evaluated, many ethical standards seemed to have been overlooked during the development process.
The text states that managerial ethics is “an individual’s responsibility to make business decisions that is legal, honest, moral, and fair” (Parnell, 2014). Based on researching the case and reading the text; I believe that Wells Fargo was affected by an ethics problem to begin with. Parnell (2014), states that “managerial ethics pertains to individuals, not corporate behavior” and “organizations can foster ethic decision making in a number of ways”. I am of the opinion that the organization failed to foster ethical decision making because of the fact that they were pushing their employees to meet sales quotas that were unattainable. The employees that felt it was ok to engage in the opening of accounts, forging of signatures, and ruining of the lives of unsuspecting customers suffered from a lack of
Obviously, the CEO had a very important part in the problem. He was supposed to keep track of everything and should have seen that something was not right a long time ago. Also, the company needs to come up with a new sale strategy and set S.M.A.R.T. goals for the long and short run and reevaluate these decisions based on the outcomes. Wells Fargo needs to implement a system in where employee's ideas can be heard. They need to feel comfortable enough to speak up their minds and give their opinions and that their opinions are going to be taken into consideration for future decisions.
During the recession, Senior Management told staff to lie to the public. They agreed that they could borrow at lower interest rates than they realistically could, in order to give off a better impression of the bank and show it in a better state than it actually was. This corruption at top level influences the culture within the organization. The lack of accountability at top management led a lot of non-implemented procedures.
In order to guarantee the auspicious ethical behaviour within the organisation is sustained, Public Bank Berhad has been relying on the “Fit and Proper” policies under the corporate governance (Public Bank Berhad, 2014). There are various policies included, and the formation of the policies is to assist in maintaining the integrity and reputation of the business. For instance, there is ‘Anti-Fraud Policy’ which would prevent any fraud, or any attempts on doing so from happening. If such things occur, the whistle-blowers would be able to report such crime to the authorities.
"This is why the market keeps going down every day - investors don't know who to trust," said Brett Trueman, an accounting professor from the University of California-Berkeley's Haas School of Business. As these things come out, it just continues to build up"(CBS MarketWatch, Hancock). The memories of the Frauds at Enron and WorldCom still haunt many investors. There have been many accounting scandals in the United States history. The Enron and the WorldCom accounting fraud affected thousands of people and it caused many changes in the rules and regulation of the corporate world. There are many similarities and differences between the two scandals and many rules and regulations have been created in order to prevent frauds like these. Enron Scandal occurred before WorldCom and despite the devastating affect of the Enron Scandal, new rules and regulations were not created in time to prevent the WorldCom Scandal. Accounting scandals like these has changed the corporate world in many ways and people are more cautious about investing because their faith had been shaken by the devastating effects of these scandals. People lost everything they had and all their life-savings. When looking at the accounting scandals in depth, it is unbelievable how much to the extent the accounting standards were broken.