HairstoncMGT7019-1

docx

School

Northcentral University *

*We aren’t endorsed by this school

Course

7019

Subject

Law

Date

Jan 9, 2024

Type

docx

Pages

Uploaded by cwashington3

Running Head: WELLS FARGO 1 Wells Fargo Unethical Behaviors Scandal Cieanna Hairston Northcentral University

Running Head: WELLS FARGO 2 Wells Fargo Banking and Company is a name known throughout the country for the financial offered in the personal and business sector. According to Witman (2018, p. 131), the company as a whole was able to avoid the financial crisis that impacted the banking industry back in 2008. As one of the leading financial institutions, Wells Fargo was known for the emphasis that was placed on ethical standards within its company. However, the company’s ethical standards were questioned when a scandal related to fictitious accounts erupted in 2016. 2011 Wall Street Journal began documenting the practice of cross-selling that was occurring at Wells Fargo. As a strategic way of increasing the products sold to customers, individuals with one type of account were being encouraged to expand to other financial lines of credit. Immense pressure was placed on bank employees to sell new products or services to its customers.. 2012 Due to the suspicion of fraudulent practices and aggressiive pressure placed on employees to increase the sales of new products and services, a special task force was created in Wells Fargo's community-banking unit. Customer complaints, linked to unapproved accounts and/or intense suggestions to open addtiional accounts, were excessive in some of the geographical regions. 2013 The termination of over 200 hundred employees led to a deeper investigation into whether cross-selling was posing increased issues or whether sales goals were at unrealistic levels. Across the country, Wells Fargo employees' level of anxiety increased related to what was preceived as unrealistic sales expectations. Southern California branches requested external consultant to investigate practices. This led to some decreased sales goals. .

Running Head: WELLS FARGO 3 2015 Lawsuits were filed alleging that Wells Fargo employees created fraudulent accounts due to the pressure placed on them by the company. In addition to the fake accounts that were created, customer complaints about unauthorized charges became more prevalent. 2016 Consumer Protection Bureau places pressure on Wells Fargo for answers. A thorough audit report reveals that approximately 5,300 Wells Fargo bankers, managers, and senior leaders were terminated related to the sales practice scandal. Investigation findings indictated that employees felt pressured to reach sales goals in order to keep jobs. As a result many created fake goals or added unauthorized charges to customer accounts to meet sales goals. 2017-Present Customer trust was lost as a result of the scandal. To date, Wells Fargo struggles to regain the trust and loyalty that it once had among the stake holders.It is still unclear the long-term impact that the unethical practices will have on Wells Fargo as a financial and banking industry. Why did unethical behavior lasted so long? Initial internal investigations led to the perception that the issue of fraudulent practices and unethical cross-selling was limited to a few employees at a few local branches. It was not until a more thorough amount of attention was paid to the customer complaints and employee reports that external investigations occurred. According to Tayan (2016), Wells Fargo had ethic rules that were developed to prevent such practices . Reporting structures could have led to the inability to assess the inappropriate practices, even with Risk Management involvement in the investigations.

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

Running Head: WELLS FARGO 4 Punishment and justification In 2018, Wells Fargo agreed to pay settlement of over 500 million dollars to states related to the fictitious accounts scandal that rocked the industry.The former CEO, John Stumpf was banned from the banking industry and required to pay an excessive fine. While the punishments are definitely justified, it does not change the emotional impact that it had on the stakeholders, including ibvestors that were misled. Difficulty in identifying ethical breaches People may find it a little more difficult to acknowledge that the behavior exhibited is not "the right thing to do". Self perception of what is right and what is wrong could also play a role in quickly identifiying breaches. In the case of Wells Fargo, the pressure that was placed on the employees to exhibit the ability to increase sales may have clouded the ability to make sound, ethical decisions. Many of the employees were in the "survival mode"; doing whatever that was required in order to keep his/her job.

Running Head: WELLS FARGO 5 References CLASS, J. E. (2018). Together We’ll Go Far . . . Away from Court: The Wells Fargo Scandal the Limits of Its Mandatory Arbitration Agreements. Review of Banking & Financial Law , 37 (2), 927–964. Tayan, B. (2016). The Wells Fargo Cross-Selling Scandal. Closer Look Series, 15. Retrieved from https://www.gsb.stanford.edu/sites/gsb/files/publicationpdf/cgri-closer-look-62- wells-fargo-cross-sellingscandal.pdf. Witman, P. D. (2018). “What Gets Measured, Gets Managed” The Wells Fargo Account Opening Scandal. Journal of Information Systems Education , 3 , 131.

HairstoncMGT7019-1

Related Documents