Ethical Problems Faced By The Wells Fargo Case Essay

Q1 – What was up with Wall Street? The Goldman Standard and Shades of Gray.

The case of Calibuso et al. v. Bank of America Corp. et al. began in 2010, when female financial analysts (FAs) filed charges in in several states and with the Equal Employment Opportunity Commission (EEOC) claiming that the Bank of America (BoA) used discriminatory pay practices against them in violation of state laws and the U.S. Equal Pay Act of 1963 and Title VII of the Civil Rights Act of 1964 (DiMarco, 2014; Calibuso, 2012). These laws forbid inequalities in pay (Schrimsher & Fretwell, 2012) and discriminating employment practices based on gender and other protected classes (42 U.S.C.A in Webber, 2015). The case was settled in favor of the plaintiffs (DiMarco, 2014). However, legal and scholarly advice suggests that these kinds of cases can be avoided through organizational efforts in training in diversity (Bendick, Egan & Lofhjelm, 2001) and legal understanding along with professional validation of practices, and managerial accountability (Arthur & Doverspike in Malos, 2015). This writer agrees; the case of Calibuso et al. v. Bank of America Corp. et al, which involved discriminatory practices related to compensation and other employment-related acts may have been avoided by observing the advice aimed at organizational efforts in anti-discrimination in the workplace.

Through the history of the United States and the history of corporate fraud, many infamous people and entities have taken advantage and abused the corporate system while finding loop holes or discrepancies to use in their favor. Corporate Fraud consists of activities undertaken by an individual or company that are done in a dishonest or in an illegal manner, and are designed to give an advantage to the perpetuating individual or company (Ivestopedia,1). Investors have been known to throw money around if its meaningless as seen on Wolf of Wall Street and other movies. In such large public firms, its rather difficult to keep track of every dollar, so cutting corners here and there in everyday transactions, is something that becomes a

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.

Case 1a) Consequentialist ethics states that actions are made based on the relevant consequences of those actions. Ethical egoism claims that an ethically correct action for someone is that which maximises his/her own good, bearing consequences to other stakeholders irrelevant. Employees at opening unauthorised accounts did so in accordance with their ‘self-interest’, striving to amplify sales targets and receive bonuses. These actions under ethical egoism would be considered as ethical actions.

After Wells Fargo acquired Wachovia they added 12 different legal issues in three years to their already cumbersome legal actions. Therefore, Wells Fargo had to participate in a transitional and transformational change to help decrease the amount of unethical behavior that Wachovia and Wells Fargo had been participating in. Furthermore, during the changing process Wells Fargo leadership had to take into consideration a plethora of factors to include who needed to change, who was going to oversee the change, what needed to be changed, why the change needed to happen, how the change would happen, the scope and the amount of time the change would need to take place. Until recently, the Wells Fargo organization had

He also increased the risk exposure of the bank and had hidden it from its superiors. By using his reputation and the trust from the bank he speculated while he should not have been able to do so.

And second, why where 5,300 employees fired, but none of them were high level executives? The ethical dilemmas should be centered on the managerial decisions from Wells Fargo. Nowadays, monopolies no dot exist. Every company is under extreme pressure from competitors and often times, the pressure leads managers to take unrealistic decisions.

In a new report from U.S. House of Representatives Committee on Oversight and Government Reform, Examining Federal Administration claimed, Corporate management and elected official, were fully aware and saw the warning signs, in fact, numerous elected officials were unethically involved with some of the companies, causing a conflict of interest. First, there was Alan Greenspan, who helped Paulson and Co., and Goldman Sachs to sabotage and eliminate Corporate regulated derivatives, knowing these regulations protect client’s investments, But, they control the funds financial institutions were allowed to charge and what report had to be giving to investors. which was a devious move, because he worked as a Federal Reserve chairman while taking this

The investment bank Goldman Sachs sold BB rated collateralized debt obligation known as CDO’s and other “garbage” to individuals then betted against it because the investment bank knew they would default. If these investments did default, these banks would earn an enormous profit. The employees at the Goldman Sachs did not disclose to their clients they had adverse interests regarding what they were selling and in the end, it led to the financial crisis and multiple lawsuits against the bank. We believe the values of greed and reckless guided employee behaviour during the crisis, as Goldman Sachs employees continued to sell their products without regret until it was too late.

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

A startling example given by Charles Ferguson is that of the derivatives market. The high risks that began with subprime lending were transferred from investors to other investors who, due to questionable rating practices, falsely believed that the investments were safe. And these rating were done by Academicians-Consultants who were given millions of dollars for these false ratings. On being questioned by the law about the validity and basis for those ratings, the only answer which was given was that at that time they believed (or were made to believe) that those investments were good. Due to these false ratings the lenders were pushed to sign up mortgages without regard to risk, or even favoring higher interest rate loans, since, once these mortgages were packaged together, the risk was disguised. According to the film, the resulting products would often have AAA ratings, equal to U.S. government bonds. The products could then be used even by investors such as retirement funds which

The financial services industry people who work with these corrupt companies are also far from innocent. In April of this year, the Securities and Exchange Commission (SEC) fined ten top Wall Street firms a total of $1.4 billion because of improper analyst research activities. Analysts are highly paid researchers who focus specifically in one industry, or even on one company, and give recommendations on whether to buy, sell, or hold a certain financial security. The SEC found that over the last five years or so, many analysts were unfairly rating companies based on their bank's relationship with that company. For instance, if Microsoft did a lot of investment banking business with Goldman

Short selling is the borrowing of shares in companies whose market value is believed to go down. The sellers gain profit when they buy back the shares at a lower price (Investopedia, n.d.). The benefits of short-selling include facilitating market efficience, driving down overprice shares, increasing liquidity of stock markets and exposing financial fraud. The CFA Institute believes that short-selling enables “participants to quickly and accurately adjust securities prices to reflect investor opinions about valuations” (Smith, 2012), hence improving marketing efficiency. It also shortens the time taken to discover corporate misconduct and predict firms who will be involved in financial misconduct (Foster, 2009).

In current intensely competitive economic market, banking plays an extremely significant role because it not only enhances economic development, but also provides valuable services to the whole country (Cv, 2015). Banks accept deposits from savers and lend these deposits to those who need them by generating financial products such as mortgages and loans. Based on Boatright’s perspective, even though banks are different in size and nature owing to both historical and geographical factors, they can be broadly defined as financial institutions that perform as a bridge connecting savers and borrowers throughout providing valuable financial products and services (Boatright, 2010). The object of this paper is to briefly explain some essential concepts about commercial banks and the corresponding ethical issues derived from these concepts.