The Falsified Actions Of Wells Fargo

Phar-Mor, Inc was a thriving discount grocery store in the late 1980’s. Phar-Mor was moving product quickly but profit margins were not significant enough to pay the bills. By the early 1990’s, Phar-Mor declared bankruptcy due to fraudulent financial reporting and misappropriation of assets, making it one of the largest frauds in U.S. history. Below, we will use auditing standard AU 316.85 Appendix A in conjunction with the video “How to Steal $500 million” to analyze how incentives/pressures, opportunities, and attitudes/rationalizations allowed for fraud to start and continue at Phar-Mor.

The Wells Fargo scandal involved a variety of stakeholders who have stake in the issue; however, the main stakeholders include the consumers, the employees and their families, and stockholders of the organization. The affect these stakeholders suffer varies, but the ultimate affect the scandal has had is violation of trust by Wells Fargo and its leadership. When examining this situation, the main stakeholders who suffered the greatest harm from the scandal were the customers who fell victim to the fraud and had their privacy violated by an organization they trusted. In the course text, Trevino and Nelson spoke of the importance of trust and its importance in a service economy. Wells Fargo violation of the consumers’ trust has ultimately added

According to the book, “The term trust refers to the confidence in a relationship that the other party will act honorably and fulfill legitimate expectations” (Friedrichs 9). Individuals put their faith in a corporation or individual because some people want to see the best in people. “We put our faith in the banks that store our money, the corporations that employ us, the retail stores where we purchase our items, a stockbroker in which we invest in and so much more” (Friedrichs 9). The book is trying to tell us that trust is involved in everything that we do every day. In the book it also states that, “trust and it violations are certainly key elements in white collar crimes” (Friedrichs 9) Trust between two individuals can be broken.. According to the FBI, “white collar crimes are not dependent on threat or physical violence” (FBI). The FBI wants us to note that corporations or individuals do not threaten anyone or physically harm the individual. Wells Fargo is a perfect example of trust and white collar crimes. Wells Fargo

The article,”To Disclose or Not to Disclose? Wells Fargo Woes Shine Light on a Knotty Problem

Wells Fargo has been penalized and has been fined 185 million dollars because they were opening fake accounts.

Recently, Wells Fargo was fined $185 million for opening up nearly 2 million accounts without permission of the account owners. The pressure to raise the average number of accounts began as early as 2009, employees who did not meet the sales targets were fired. Wells Fargo overlooked the fraud committed in order to meet those numbers. Since the exposure, Wells Fargo has fired roughly 5,300 employees. Though the effects on Wells Fargo go beyond the fine, this example shows how large banks and businesses are able to commit crimes without any real punishment. The Wells Fargo scheme was explicitly illegal, yet there are many business practices that, though unethical, are legal.

Bank of America is one of the largest banks in the nation. It is a multinational company and it is recognized by its high revenue value. Unfortunately, Bank of America has endured many complaints and harsh views regarding their lack of ethics. Ethical issues occur when there is a blatant disregard to implement integrity, trust, and responsibility. In some financial institutions, ethical matters are displayed in the way the consumers are treated. Within the past nine years, Bank of America has diminished all of their ethical promises by revealing customer information without their permission; discriminating against consumers based on their race; and manipulating overdraft fees in order to benefit the bank. In order to assess these problems, it is vital to recognize what Bank of America claims to stand for and determine where their most concerning issues are generated from.

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.

Until the intent or motive is recognized, a problem cannot be described or solved. This should be a major question to ask in the Wells Fargo case. Most workers, especially in sales and marketing jobs are known to be compensated and promoted based on their performances (number of products and services sold, number of set targets met). So it is possible that Wells Fargo compensation and promotion structure motivated these employees to engage in such fraudulent acts in order to boost their incentives and bonuses which was measured based on their performance. Because it is surprising that such huge number of employees would engage in such acts to cheat customers for a period of five years. Both former and current Wells Fargo employees told regulators that their motivation to open unauthorized accounts was because of the compensation policies and felt extreme pressure to do that to benefit from such policies (Corkery

All the working staffs should be trained to be trustworthy employees so that this type of behavior is curbed in the future. Every person need to be feeling secure when having their money in the bank (Higgins, 2015). Though it shall be a difficult task especially maintaining the old customers apart from creating new account with the bank. The bank is supposed to create a video series which is only view internally in which the senior executives are require to have a discussion on all the grey areas of ethics. Through this they shall be able to manage their business in terms of making operational and managerial decisions. These videos shall play a major role in the management of the operations in the bank. The bank should explain to its employees that after they are found guilty in the bank they shall be fined before being

Embezzlement is an act withholding assets for the purpose of conversion of such assets, by one or more persons to whom the assets were entrusted, either to be held or to be used for specific purposes. Embezzlement is a type of financial fraud. a lawyer might embezzle funds from the trust accounts of his or her clients; a financial advisor might embezzle the funds of investors; and a husband or a wife might embezzle funds from a bank account jointly held with the spouse.

In September of 2016, it was revealed that there was alleged misconduct at one of the largest and safest banking institutions in the United States. Wells Fargo Bank was ranked among the nation’s safest financial institutions according to an analysis done by Global Financial, (Inside Tucson Business, 2009). Alleging that between May 2011 and July 2015, there were more than 2 million bank accounts or credit cards opened for customers without their knowledge or permission (Blake, 2016). Clients started complaining the they were receiving debit/credit cards from the bank that they had not ordered. Wells Fargo employees also started complaining that about the unethical behaviors they witnessed or were asked to participate in to the Human Resource Departments, the bank’s internal ethics hotline, branch’s individual managers and supervisors. All which led to the discovery of the fraud scandal.

Scandals in the business world are not an uncommon topic to appear in new headlines. Recently Wells Fargo has fired over 5,000 employees for creating over 2 million fake accounts. New bank and credit card accounts were created without prior knowledge from their customers. The accounts that were created resulted in those customers inquiring fees such as overdraft fees. These fake accounts have been created over a five-year timeframe.

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

Hiding or divulging information: Goldman bet against their clients several times. They knew material information on certain investment; however, they never communicated that to their clients because they were making money off them.