Case Analysis on Wells Fargo-The Fake Accounts Scandal

Name: K Sraban Kumar

Roll No.: 122024101023
Sec: D (BFS)

Wells Fargo Bank is known as a respected leading bank in the banking industry. Many people
trusted the safe keeping of their finances and investments with the company. However,
between May 2011 and July 2015 over five thousand employees of the company participated
in the creation of accounts without customers’ authorization. This scandal seemed to have
stemmed from Wells Fargo’s CEO John Stumpf “eight is great” philosophy. At Wells Fargo
employees were scolded or even fired for not making the outrage sell quota of getting each
customer per household to agree to at least eight company products. This is also none as
cross-selling which is what most banks do. The pressure was on Wells Fargo employees
because of the high number and unreasonable expectations. With that much pressure several
thousand employees resorted to cutting corners and creating fraudulent deposit accounts and
credit card. The accounts and credit cards that went unpaid created fees that Wells Fargo
would then collect on allowing employees to keep their jobs and even profit bonuses. Since
the scandal was revealed Wells Fargo is trying to repair its relationship with customers and
employees. The majority of those affected would prefer protect their source of income than
deal with the repercussions of their deception. Employees were liable to disciplinary
procedures such as demotions and terminations if they did not fulfil their sales quotas.
According to a government probe, Wells Fargo's clients lost more than $2.6 million in fees as
a result of the bank's creation of over 2 million deposit and credit card accounts about which
they were unaware. Many fraud schemes occur because of management's ability to override
controls. Recording fictitious journal entries ,Intentionally biasing assumptions and
judgments used to estimate accounts (e.g., pension plan assumptions or bad debt allowances).
Altering records and terms related to important and unusual transactions such as what Wells
Fargo employees did.
In the case of Wells Fargo, the intrinsic value corresponds to the cost-benefit analysis step (a
crucial procedure involved in introducing any significant change in an organization). Wells
Fargo, like any other effectively run firm, should have formed a task force led by experienced
executives to oversee the execution of the cross-selling incentives. The team should have
additionally gathered information on any potential difficulties that the stakeholders could
have. Comparing employee concerns like job security to bonuses might have led in new
approaches to motivate staff to fulfil monthly goals. In the past, the company has showed a
strong commitment to social corporate responsibility (SCR). Wells Fargo was known for its
outstanding customer service, charitable giving, and a range of other corporate attributes. .
SCR is the focus of one of the company's business segments. It devotes a significant amount
of resources to finding solutions to the difficulties that local communities confront. It was
even included into the mission statement of Wells Fargo's founders. To achieve long-term
prosperity and a great quality of life for all stakeholders, its members are guided by its
business values. The controversy, on the other hand, shows that either management
overlooked this critical stage or that certain officers within the task force skewed the results
for personal gain. As a result of the mistreatment, several members' self-esteem was injured.
The virtue hypothesis looks at Wells Fargo's decision-makers' behavioural tendencies, not
necessarily their acts, to see if they are incongruous with their established character. In the
past, the company has showed a strong commitment to social corporate responsibility (SCR).
Wells Fargo was known for its outstanding customer service, charitable giving, and a range
of other corporate attributes. One of the company's business sectors is focused on SCR. It
devotes a significant amount of resources to finding solutions to the difficulties that local
communities confront. It was even included into the mission statement of Wells Fargo's
founders. Its members are guided by the organization's corporate values in order to achieve
long-term success. As of 2020, Wells Fargo's performance was still being hampered by the
scandal's continuous regulatory scrutiny. Wells Fargo's recovery has been hampered by the
Federal Reserve's growth limit and low interest rates.
At Wells Fargo, more comprehensive processes are required to ensure that management acts
in the best interests of all stakeholders. As part of the incentives, CSR structures, human
resource management systems, and internal control mechanisms should all be updated. Wells
Fargo should exercise greater caution when it comes to corporate management. It should
replace profit maximisation goals with value creation metrics that prioritise all stakeholders'
social, physical, emotional, and financial well-being. Prioritizing member wellbeing before
financial goals would have clearly allowed the organisation to prevent injustices and respond
appropriately at the proper moment.