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Running Head: Wells Fargo

Case Study 8.18 Wells Fargo

12/3/20

BUSI 495

Professor Jewe

Azusa Pacific University

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Case Study 8.18

Summary

In Case 8.18, Wells Fargo or Selling Accounts, or Making Them Up?, highlights the

actions of how Wells Fargo and had committed fraud and fake accounts to boost their sales

numbers in order to make to company look better and ultimately hurt many customers in the

making financially. Wells Fargo undermined many people within the business world and would

write accounts for themselves and close them after the quarter ended to juice up the numbers

for the company. Another thing that Wells Fargo has done is ignore the culture that they set

out for the customer which is to “Put the customer first” and in many cases throughout this

they did not have the greatest intention for both their employees and customers (Jennings

2018). Many people involved were effected in some way and it definitely changed the way the

public sees the banking industry and Wells Fargo as a whole doing corrupt things and them

being exposed.

Wells Fargo CEO is John Stumpf who has been in the banking industry at an early age of

26 and always put the Wells Fargo culture “Put the customer first” at the top of his list (Place

2019). For the employees that did not honor Stumpf’s culture at Wells Fargo he would fire

them since they would set up growth goals and achieving them illegally and trying to move up

in the business to make their numbers look better. He employees were caught cheating for the

company set up fake accounts for themselves and sending random customers credit cards that

they did not request and having friends and family opened up accounts and closing them after

the quarterly ending. Mr. Gerstner, the former CEO of IBM wrote about how Stumpf allowed

his employees to “eat” the banks reputation and Stumpf states how he was saying that these
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employees destroyed the culture that he had worked so hard to create and establish. While

talking about Mr. Stumpf similarly to him the Volkswagen CEO falsified emissions in a scam

which cost them a lot of their brand name recognition to do go downhill. A scenario the author

puts out is to analyze and ask each of them one-by-one and ask them all one-by-one why they

went against their own cultures and ignoring those customers needs. There are important

lessons and fixes from the Wells Fargo cases usually CEO’s try to stay out of the headlines and

leaders lack their helplessness with the leaders within the organization.

The motto for CEO’s everywhere should be that if it happens at your company it is your

culture and that can represent many things within a companies structure. For the 5300 workers

at Wells Fargo who were fired and if HR didn’t notice what was going on in the company then

there is a problem. Wells should have answered many questions beyond what they did answer

and there are still some things that need to addressed to the public about their situation with

fraud and damaging customer’s trust.

In a one day period of time that Wells had struggled, there were other pieces missing

about the culture “stuff” that was going on. The SEC has gone after many tricksters such as the

City of Devils Lakes N.D. and the agency incentivized a fast and furious approach: Get as much

as you can from as many as you can as quickly as you can (Jennings 2018). After that the

agency employees responded but are shying away from the fact that these cases take time,

patience, work and experience to find such fraud that can be harmful to the community around

them. Talking about Steven A. Cohen who promised a big bonus to his top traders as long as

they beat the market performance and there payout would be bonuses of twenty to twenty-

five percent. Mr. Cohen had escaped jail time by the court having no proof he ever knew about
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his employees activities that were taking place since he was almost charged with insider

trading. Supposedly he did not know about the employees activities and neither did Stumpf

know about the phony practices from his 5300 employees. Next Jennings says, to realign

incentives from numbers to behaviors and as management theory presents it and is correct the

behaviors should generate numbers. In the HR field there is a lot of chatter as companies work

to find ways of measurement that do not despise the ultimate cultural messages. Employees

respond to what causes pain and missing a bonus and having a low performance evaluation are

both painful and hard to realize for myself.

If Wells Fargo were to cite and chant “put the customer first” it does not create you a

culture right away and the words alone do not do anything for you. Wells Fargo ultimately

ignored their company’s mantra to gain from the bonuses, performance evaluations, and

promotions for the highest numbers achieved. The employees at Wells Fargo knew what to do

in order to move up and gain promotions for their work and the quarterly bonus checks

definitely drew in their attention to want to commit these kind of fraudulent acts. In 2005, this

is when the company first had found out about what an employee witnessed which is the

employees in there with her were opening up sham accounts, forging important paperwork,

and sending out unwanted credit cards that the bank had sent them. In 2007, Stumpf attained

two letters from employees about the fraud going on within their workplace and again in 2010

the Wells Fargo board chairman received the same letter. Stumpf decided to cover his acts of

the employees by creating the sales quality manual that the employees should do work and

study from. One of the employees who wrote the letters also wrote one to corporate and was

fired and still the supervisors remained with Wells Fargo the ones who fired the employee. If
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an employee gets the courage to write a letter to corporate the body of the case should receive

some attention. Having and creating a one on one conversation with the employees would tell

culture experts and provide a clear picture for them of what the employees are doing and

witnessing. All of the surveys that they had created to try to evaluate the workplace never

worked quite well either because it never revealed what is truly going on with the company.

Employees definitely limit their detection from their higher ups and the supervisors make sure

to warn them that this is what will reflect my managing to sway them to judge the survey

better. The letters that employees are sending out to talk about the fraud practices going on

could be evidence of cultural issues within the company as well. The eldest son of the author

was working at Wells Fargo and had an ethical dilemma and expressed it and what he did was

in no way right. The son of the author, worked at Wells Fargo and was proud of his job and

earnings he had made all on his own and he had created many new accounts. His quarterly

check would seem to be fabulous until one day he talked to her about his work and was located

in a retirement area with not a lot of money there and explained that there customers were

coming back in with extra charges or charges they never had and many of them closed their

accounts and felt really guilty. He then talked about and reconciled to discuss his concerns to

his supervisor about the extra charges on the customer’s accounts. The supervisor then stated

while the son explained what had happened that if he did not meet his goals that he would

stuck at the drive-thru ATM all of the time which is not a good job and very boring to do. The

son ultimately decided to resign because of the supervisors behavior and it showed to be the

better choice ethically in the long run. When the big news and scam of Wells Fargo occurred

the son had posted it on Facebook and it was going viral all around the world. The experience
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the son had was upsetting to say the least because it showed him that higher leaders do not

want to learn more about their culture as a business and improve it but to keep at the same old

tactics of creating and allowing fraud. The letter he had given to the supervisor was eventually

crumpled up and the one he had sent to corporate never received any response from any

customer support representative or anything.

It is important to mind your mantras since cultures are often undermined by the words

that CEO’s may use to seem more intimidating. Washington Mutual had a similar thing happen

to them where the employees mantra and companies mantra was “get to yes” and employees

were writing mortgages that were fraudulent, lacked proof of their income, and had appraisals

that covered the different properties they owned. The push to get the mantra alive and well

were rewarded and evaluated based on how many times they can get people to say yes.

Mantras are broken all of the time and the results of them are fake and it can easily be seen in

the public if you really look closely.

Research

After the Wells Fargo case, many things have transpired shortly afterwards. In August of

2018, Wells Fargo agreed to pay 2 billion dollar penalty to settle allegations the bank originated

and sold mortgage loans that included a lot of false information throughout the years (Cheslow

2019). This just goes to show how Wells Fargo shows that this is a reoccurring practice and it

should not be tolerated whatsoever and they should not have done what they did at all for any

circumstance. The reason why the culture is still like that is because it is implemented and

learned from within and it should not only be the employees being the targets but upper level

management as well. Since then the SEC stated that Stumpf would agree to pay 2.5 million
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dollars in cash and would use the money to pay back the investors who were hurt by the

falsified reports (Egan 2020). I am glad that Wells Fargo and upper officials agreed to pay the

fines that they were hit with because the investors who lost out on money should be repaid in

some way for those involved. The investors should try to do more for their trouble and take

advantage of their situation of being lied to and cheated to and I believe there may be a better

opportunity to actually change the culture there. The United States government stated that the

former Wells Fargo CEO John Stumpf will be banned from the banking industry and will pay

17.5 million dollars for scandals in which millions of fake accounts were put up to meet sales

quotas (Franck 2020). In the end, Stumpf got what he had intended to come around and him

losing his license should be the least of his worries and the fact that he skipped out on jail time

is amazing.

Analysis

For the case of Wells Fargo they have had many problems throughout their business and

it shows for the fake accounts they had made and the extra charges they have and the

unwanted unexpected credit cards that arrive on peoples footsteps without them ordering it.

There are many ethical issues at rest within Wells Fargo and it is important to analyze each and

every one of them in order to really see the truth of the matter for what they have done and

why they had done it in the first place. A lot of us can see the damage that Wells Fargo had

caused especially for investors and customers throughout their lawsuits that they have

reoccurring all the time. The greed and power of upper level management allowed 5300

employees to be fired for most likely listening to the orders given to them and it’s really sad

because a lot of them were probably dedicated to their work only to be betrayed by the
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company you work for. John Stumpf supported this culture but it was happening way before

this and the culture of the company needs to change since the identity of the company is not in

a good place right now and the reputation is definitely damaged from that. The fact that

people and customers were receiving extra charges for no reason and a credit for no reason is a

little bit suspicious and I am glad many others stood behind the end to the tyranny of lying to

the public and damaging their reputation as a bank in America.

One of the main ethical issues I see is the firing of Wells Fargo employees for no good

given reason especially when they are following orders from their higher ups and listening to

every word they say. I believe that the ethical issue here is to not fire the 5300 employees for

trying to support an agenda that they set out their employees. Another thing is to not fire

anyone who is informing you about inaction to stop the fraudulent activity that is going on

within the company and it is quite sad to see that the company does not want to back that up.

In a rare look inside the bank, former workers of Wells Fargo tell NPR that wrongdoing was

widespread even in the bank branch in the very building where the CEO and senior

management team worked (Arnold 2016). This just shows how Wells Fargo knew about what

was going on since it was happening in the same building and it is in plain sight and to me it is

pretty ridiculous to assume that they had never noticed it or seen it happen at least once. It is

important to know that the employees did not deserve to be fired in my opinion and it is a big

ethical issue since they were most likely just taking orders from their senior level management.

I believe that the supervisors who did fire all of these people should take a look at themselves

and see if they are totally ethical as well I do not believe that many people would be involved if

it wasn’t taught to deceive.

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Another one of the main ethical issues is allowing the culture of Wells Fargo to go down

a narrow path to nowhere where it is acceptable to commit fraud and how others never let the

upper level management know seems a little bit fishy to me and I do not buy it one bit. In a

statement from Senator Warren to Stumpf she said, “And when it all blew up, you kept your

job, you kept your multimillion dollar bonuses and you went on television to blame thousands

of $12-an-hour employees who were just trying to meet cross-sell quotas that made you rich.”

(Tayan 2019). The leadership of Wells Fargo was definitely set out to create destruction and

boost their numbers for better bonuses and gains back for them. It is unethical for the CEO

blame a 12 dollar an hour employee and them just trying to do what they are told and meet the

sales quota by lying in the books. Ultimately I do not believe that it is fair for Wells Fargo to get

away with this by buying their way out of everything and situation till this day the reputation of

Wells Fargo is going down and more people are starting to realize the facts about the company.
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References

Arnold, C. (2016, October 04). Former Wells Fargo Employees Describe Toxic Sales Culture,

Even At HQ. Retrieved December 03, 2020, from

https://www.npr.org/2016/10/04/496508361/former-wells-fargo-employees-describe-

toxic-sales-culture-even-at-hq

Cheslow, D. (2019, March 12). CEO Says Wells Fargo Has Transformed After Scandals;

Lawmakers Are Skeptical. Retrieved December 03, 2020, from

https://www.npr.org/2019/03/12/702501160/ceo-says-wells-fargo-has-transformed-

after-scandals-lawmakers-are-skeptical

Egan, M. (2020, November 13). SEC charges former Wells Fargo executives over fake-accounts

scandal. Retrieved December 03, 2020, from

https://www.cnn.com/2020/11/13/business/wells-fargo-ceo-stumpf-charged-

sec/index.html

Franck, T. (2020, January 23). Former Wells Fargo CEO John Stumpf barred from industry, to pay

$17.5 million for sales scandal. Retrieved December 03, 2020, from

https://www.cnbc.com/2020/01/23/former-wells-fargo-ceo-stumpf-barred-from-

industry-to-pay-17point5-million-over-sales-scandal.html

Jennings, M. (2018). Business ethics: Case studies and selected readings. Mason, OH: Cengage

learning.
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Place, M. (2019, April 25). John Stumpf bio. Retrieved December 03, 2020, from

https://www.marketplace.org/2008/06/10/john-stumpf-bio/

Tayan, B. (2019, February 06). The Wells Fargo Cross-Selling Scandal. Retrieved December 03,

2020, from https://corpgov.law.harvard.edu/2019/02/06/the-wells-fargo-cross-selling-

scandal-2/