Wells Fargo Unethical Actions: The Case Of Wells Fargo

In California, eight Wells Fargo employees were convicted of committing fraud facing a maximum penalty of 30 years in federal prison, also each employee is charged with at least one count of aggravated identity theft, which carries another two years in prison (https://www.justice.gov/usao-cdca/pr/eight-people-charged-bank-fraud-scheme-allegedly-used-information-stolen-wells-fargo). In the wake of the scandal, over 5,300 employees were fired over the course of five years for their involvements in the creation of the fake accounts. Some of the initial whistleblowers of the scandal faced retaliation by being terminated for speaking out against the orders to open fake accounts. CNN Money correspondent Matt Egan spoke with Bill Bado, a former employee of Wells Fargo, who has not been able to security another banking securities job since his termination for calling the Ethics Hotline to report the fraudulent activities.

Wells Fargo fired 5300 employees. The employees took millions in fees by regularly opening new

Wells Fargo has been penalized and has been fined 185 million dollars because they were opening fake accounts.

Recently, Wells Fargo was fined $185 million for opening up nearly 2 million accounts without permission of the account owners. The pressure to raise the average number of accounts began as early as 2009, employees who did not meet the sales targets were fired. Wells Fargo overlooked the fraud committed in order to meet those numbers. Since the exposure, Wells Fargo has fired roughly 5,300 employees. Though the effects on Wells Fargo go beyond the fine, this example shows how large banks and businesses are able to commit crimes without any real punishment. The Wells Fargo scheme was explicitly illegal, yet there are many business practices that, though unethical, are legal.

On September 8 2016, the Consumer Financial Protection Bureau (CFBP) announced that it was taking an enforcement action against Wells Fargo Bank . Wells Fargo is a Fortune 100 company and one of the "Big Four Banks" of the United States. Investigations conducted by the Bureau revealed that employees of the bank created unauthorized deposit and credit card accounts across the country to meet sales goals. Over the years, the bank’s employees opened over 1.5 million fraudulent bank accounts and 0.5 million fake credit card accounts for customers, to meet sales targets and obtain bonuses. The affected consumers, were being harmed by the associated charges and fees for these accounts. The fees include insufficient funds or overdraft fees for the deposit accounts and annual fees for credit card accounts.

In 2016, federal regulators caught Wells Fargo creating millions of fake bank and credit card accounts; over 1.5 million bank accounts were created. Furthermore, federal regulators also said that 565,443 credit cards were created, and 1400 of those accounts had been charged over 400,000 dollars in fees. Wells Fargo employees broke many ethical and legal boundaries and engaged in counterproductive work behavior.

As with much of Enron, their outward appearance did not match what was really going on inside the company. Enron ended up cultivating their own demise for bankruptcy by how they ran their company. This corrupt corporate culture was a place whose employees threw ethical responsibility to the wind if it meant financial gain. At Enron, the employees were motivated by a very “cut-throat” culture. If an employee didn’t perform well enough, they would simply be replaced by someone who could. “The company’s culture had profound effects on the ethics of its employees” (Sims, pg.243). Like a parent to their children, when the executives of a company pursue unethical financial means, it sets a certain tone for their employees and even the market of the company. As mentioned before, Enron had a very “cut-throat” attitude in regards to their employees. This also became one Enron’s main ethical falling points. According to the class text, “employees were rated every six months, with those ranked in the bottom 20 percent forced to leave” (Ferrell, 2017, pg. 287). This system which pits employees against each other rather than having them work together will create a workplace of dishonesty and a recipe of disaster for the company. This coupled with the objective of financial growth, creates a very dim opportunity for any ethical culture. “The entire cultural framework of Enron not only allowed unethical behavior to flourish,

The ethics of the bank requires that there is ethics of integrity. It is supposed to be created through a culture in the bank and it should be one of the banks priorities because this is a business and they gain the profits from the people they serve on daily basis. Even if the bank shall survive this wave of scandal is so difficult now to convince any client to join this Wells Fargo which shall cause them a lot of money. Also all the old customers may start withdrawing and looking for other banks which they feel are more secure when they are keeping the money for them. It is so hurting and distrustful for a banking instead of accruing money in the accounts of their customers what they wells was doing was that it was misusing their money and giving them extra fees.

Embezzlement is an act withholding assets for the purpose of conversion of such assets, by one or more persons to whom the assets were entrusted, either to be held or to be used for specific purposes. Embezzlement is a type of financial fraud. a lawyer might embezzle funds from the trust accounts of his or her clients; a financial advisor might embezzle the funds of investors; and a husband or a wife might embezzle funds from a bank account jointly held with the spouse.

In September of 2016, it was revealed that there was alleged misconduct at one of the largest and safest banking institutions in the United States. Wells Fargo Bank was ranked among the nation’s safest financial institutions according to an analysis done by Global Financial, (Inside Tucson Business, 2009). Alleging that between May 2011 and July 2015, there were more than 2 million bank accounts or credit cards opened for customers without their knowledge or permission (Blake, 2016). Clients started complaining the they were receiving debit/credit cards from the bank that they had not ordered. Wells Fargo employees also started complaining that about the unethical behaviors they witnessed or were asked to participate in to the Human Resource Departments, the bank’s internal ethics hotline, branch’s individual managers and supervisors. All which led to the discovery of the fraud scandal.

Scandals in the business world are not an uncommon topic to appear in new headlines. Recently Wells Fargo has fired over 5,000 employees for creating over 2 million fake accounts. New bank and credit card accounts were created without prior knowledge from their customers. The accounts that were created resulted in those customers inquiring fees such as overdraft fees. These fake accounts have been created over a five-year timeframe.

(Panza & Potthast, n.d.) Ethics is very important to a company’s success. Ethical behavior can bring benefits to a business. They can attract customers, which can lead to a boost in sales and profits. It can attract the right employees and increase productivity. It can also attract investors and keep the company’s share price high. Unethical behavior on the other hand can damage a company’s reputation and make it less appealing to stakeholders. It could also result in lower profits.

Well Fargo is currently being sued over 185 Million Dollars and 5,300 were fired for making fake account.

Hiding or divulging information: Goldman bet against their clients several times. They knew material information on certain investment; however, they never communicated that to their clients because they were making money off them.

customers had no idea about it. The customers were charged fees for those accounts since 2011.