Professional Documents
Culture Documents
Account Scandal
Alay Parikh
Dan Quitt
Lauren Zamparelli
Sreejith Nair
WELLS FARGO
Introduction
largest bank in the U.S. by assets.
The fraud appears to have stemmed from CEO John Stumpf’s mantra to
employees: “eight is great.” Meaning: get eight Wells Fargo products into the
hands of each customer. But this directive proved burdensome for bank
employees as they struggled to meet demanding quotas and satisfy even more
demanding managers.
How the reveal went down
On October 3, 2013, E. Scott Reckard wrote an article in The Los Angeles Times
about Wells Fargo firing 30 branch employees, “Who the bank said had opened
accounts that were never used and attempted to manipulate customer-
satisfaction surveys”
How the reveal went down
On December 21, 2013, another article written by E. Scott Reckard again broke in
the Los Angeles Times. The new article presented personal stories from
employees and manager about how the Wells Fargo company visions and values
had been manipulated into creating a concerning level of pressure for
employees. “To meet quotas…[we] have opened unneeded accounts for
customers, ordered credit cards without customers’ permission and forged client
signature on paperwork. Some employees begged family members to open
ghost accounts.”
Timeline
May 2011 - July 2015 | Sept. 08, 2016 | Sept. 13, 2016 | Sept. 14, 2016 | Sept. 16, 2016
Sept. 20, 2016 | Sept. 22, 2016 | Sept. 26, 2016 | Sept. 27, 2016
Timeline
Oct. 19, 2016 | Oct. 24, 2016 | Oct. 03, 2016
May 2011 - July 2015 2 million bank accounts or credit cards were opened or applied for without
customers' knowledge or permission.
September 13, 2016 The bank announced that it would be ending its controversial employee
sales goals program effective Jan. 1, 2017.
September 14, 2016 It was announced that the FBI and federal prosecutors in New York and
California were probing the bank over the alleged misconduct.
September 16, 2016 The House of Representative's Financial Services Committee opened an
investigation into the bank's alleged misconduct.
May 2011 - July 2015 | Sept. 08, 2016 | Sept. 13, 2016 | Sept. 14, 2016 | Sept. 16, 2016
Sept. 20, 2016 | Sept. 22, 2016 | Sept. 26, 2016 | Sept. 27, 2016
Timeline
Oct. 19, 2016 | Oct. 24, 2016 | Oct. 03, 2016
September 20, 2016 Stumpf appeared in front of the Senate Banking Committee.
September 22, 2016 A group of Senate Democrats asked the DOL to open an investigation into
whether Wells Fargo violated the Fair Labor Standards Act (FLSA).
September 26, 2016 Two former Wells Fargo employees filed a lawsuit against the bank.
September 27, 2016 The bank's independent directors announced that Stumpf will forgo $41
million worth of promised compensation as well as his usual salary as they
launch an independent investigation.
May 2011 - July 2015 | Sept. 08, 2016 | Sept. 13, 2016 | Sept. 14, 2016 | Sept. 16, 2016
Sept. 20, 2016 | Sept. 22, 2016 | Sept. 26, 2016 | Sept. 27, 2016
Timeline
Oct. 19, 2016 | Oct. 24, 2016 | Oct. 03, 2016
September 29, 2016 Stumpf went back to Capitol Hill, for hearing with House Financial Services
Committee.
October 05, 2016 Fourteen senators sent a letter to AG Loretta Lynch urging the Justice
Department to "thoroughly investigate the culpability of senior executives"
at Wells Fargo
October 12, 2016 Shortly after markets closed, word came that Stumpf was out. The bank
said he would retire as CEO and Chairman effective immediately.
May 2011 - July 2015 | Sept. 08, 2016 | Sept. 13, 2016 | Sept. 14, 2016 | Sept. 16, 2016
Sept. 20, 2016 | Sept. 22, 2016 | Sept. 26, 2016 | Sept. 27, 2016
Timeline
Oct. 19, 2016 | Oct. 24, 2016 | Oct. 03, 2016
October 19, 2016 California AG Kamala Harris launched a criminal investigation into whether
Wells Fargo employees committed false impersonation and identity theft as
part of the accounts scandal.
October 24, 2016 Wells Fargo began running television ADs in an effort to restore trust in its
brand.
October 03, 2016 The bank disclosed in regulatory filings that the U.S. Securities and
Exchange Commission (SEC) was investigating its sales practices.
The Numbers
The Lessons of an Ethics Failure
Every manager should study the Wells Fargo case for the valuable lessons to be learned.
Some of the simplest and most effective are:
★ If employees raise their hands to speak up, they must be taken seriously.
★ Letting any problem, no matter how insignificant or non-material, fester over many years is a
recipe for disaster and may well also draw increased regulatory scrutiny.
★ Design incentives with care; the company will get the behavior it incentivizes.
★ Risk management is an ongoing, not an annual or one-time, process.
★ It is not simply tone at the top but also tone in the middle and at the bottom that drive culture.
How did the market react? Wells Fargo & Co | NYSE: WFC
“Our senior leadership is committed — and I am personally committed — to taking the decisive
actions and to learning the necessary lessons to ensure our company and our customers are never
susceptible to the kinds of behaviors and failures that got us to where we are today.”
Things went wrong. Problems need to be fixed. Customers and team members were harmed and
need to be cared for. And a better and stronger Wells Fargo must emerge out of all of this.
Tim Sloan the new CEO
Some excerpts from the new CEO's prepared remarks in a company wide address from Charlotte on Oct. 25, 2016.
● There are things that need to be fixed within our culture. There are weaknesses within it that we
must change.
● There are ways in which we behaved and did business that did not serve our customers, or our
team members, or our investors or the many institutions and communities that rely on us to get
things right.
Tim Sloan the new CEO
Some excerpts from the new CEO's prepared remarks in a company wide address from Charlotte on Oct. 25, 2016.
Here are two ways you can help immediately — because I know many of you are eager and ready to
help.
● First, take care of our customers. Understand their needs. Address their concerns and provide
great service and advice. Done ethically and with their interests at heart, it’s the most important
work we can do to restore trust in our company.
● Second, get engaged in understanding our reality and how we’re moving forward.
Tim Sloan the new CEO
Some excerpts from the new CEO's prepared remarks in a company wide address from Charlotte on Oct. 25, 2016.
We have also changed the retail bank’s risk management processes. This is consistent with the reorganization of
enterprise functions we have conducted across the company to create a stronger risk and control foundation that
allows senior team members across the bank to provide more independent, credible challenges to how we operate.
We’ve recommitted ourselves to our customers’ overall experience, eliminating product sales goals for all retail
banking team members.
Next year, we’ll introduce a new performance plan for retail bankers that will be based on customer service, growth,
and risk management. Our goal: “We want nothing to get in the way of doing what is right for customers”.
The Conclusion
Externally, the best thing Wells Fargo can do is to get in front of the issue with the public and their
customers. They need everyone to feel as though they are taking this with all due seriousness and
believe that their customers truly are the heart of their business. They need to do this by reaching out
to their customers and making them feel comfortable to ask any questions they might have.
It has been approximately five months since the Wells Fargo scandal details were fully revealed and
in our opinion, we think they are dealing with the aftermath considerably well.
References
● https://stories.wf.com/
● https://www.forbes.com/
● http://www.nationaldefensemagazine.org
● http://abcnews.go.com/Business
● https://en.wikipedia.org/wiki/Wells_Fargo
● https://www.google.com/finance?q=WFC
● https://www.youtube.com
The famous hearing of the year!
A 17 minute video reference of the hearing
It's No Laughing Matter
It's No Laughing Matter
It's No Laughing Matter
Thank You!
Alay Parikh
Dan Quitt
Lauren Zamparelli
Sreejith Nair