Wells Fargo, a financial services company, has been dealing with a rather huge issue as of late. The issue is that a couple of its executives have been found guilty of creating fraudulent accounts. As a response to this, the two executives will be repaying the company an estimated 75 million as issued by the bank’s board for creating these fraudulent accounts. The two executives, which have been fined for their participation in the criminal activity are “Carrie Tolstedt, who headed the troubled sales division,… and former CEO John Stumpf” (NPR). Furthermore, Stumpf has also been connected to other issues within Wells Fargo, which has put him at odds with the Consumer Financial Protection Agency. As the agency has announced via a report, he floundered to protect the institutions reputation from the unethical practice of opening unofficial accounts.
Furthermore, several thousands of bank employees had been fired due to the scandal, which was higher then what was initially thought by the institution’s board. Additionally, the report stated that Stumpf ignored and disregarded the issue and many other things that were criticized by the Agency. Moreover, Wells Fargo has reclaimed roughly 180 million dollars in executive compensation over the wrongdoing by the two executives. Also, both executives were forced to return several millions of dollars to the institution. The two executives have repaid Wells Fargo 136 million in total for their criminal acts.
Reasons for the massive issues Wells Fargo reported were the “distortion of the sales culture and management system in the unit that was at the heart of the scandal, as well as other organizational issues” (NPR). Likewise, during the incidents, any employee that tried to raise concerns of the activity were ultimately removed from their position. Moreover, how the executives acted to the issues within the division were very defensive minded.
In January of this year, Wells Fargo altered their incentive plans from the selling of products to the distribution of customer services as a response to the entire issue that it has been dealing with for the past few months.