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    Wells Fargo Brief Summary and Questions September 22 2016

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    Ashutosh Jha
    Wells Fargo faced a major fraud scandal where over 5,000 employees created millions of unauthorized customer accounts over 5 years to meet unrealistic sales goals. As a result, the bank was fined $185 million by regulators, lost its position as the largest bank by market cap, and suffered reputational damage. The CEO was called before Congress and questions remained over how Wells Fargo handled the aftermath, whether the CEO should step down, if executive compensation should be reduced, what caused the problems, and what can be learned from a career and prevention perspective.

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    Wells Fargo Brief Summary and Questions September 22 2016

    Uploaded by

    Ashutosh Jha
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    Wells Fargo faced a major fraud scandal where over 5,000 employees created millions of unauthorized customer accounts over 5 years to meet unrealistic sales goals. As a result, the bank was fined $185 million by regulators, lost its position as the largest bank by market cap, and suffered reputational damage. The CEO was called before Congress and questions remained over how Wells Fargo handled the aftermath, whether the CEO should step down, if executive compensation should be reduced, what caused the problems, and what can be learned from a career and prevention perspective.

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    Wells Fargo faced a major fraud scandal where over 5,000 employees created millions of unauthorized customer accounts over 5 years to meet unrealistic sales goals. As a result, the bank was fined $185 million by regulators, lost its position as the largest bank by market cap, and suffered reputational damage. The CEO was called before Congress and questions remained over how Wells Fargo handled the aftermath, whether the CEO should step down, if executive compensation should be reduced, what caused the problems, and what can be learned from a career and prevention perspective.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
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    2 views2 pages

    Wells Fargo Brief Summary and Questions September 22 2016

    Uploaded by

    Ashutosh Jha
    Wells Fargo faced a major fraud scandal where over 5,000 employees created millions of unauthorized customer accounts over 5 years to meet unrealistic sales goals. As a result, the bank was fined $185 million by regulators, lost its position as the largest bank by market cap, and suffered reputational damage. The CEO was called before Congress and questions remained over how Wells Fargo handled the aftermath, whether the CEO should step down, if executive compensation should be reduced, what caused the problems, and what can be learned from a career and prevention perspective.

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    © All Rights Reserved
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    Wells Fargo Case Study

    September 22, 2016

    Wells Fargo

    Second largest deposit taker

    Largest Market Cap (before sanction)

    Emerged strongly from 2008 market crisis

    Has shares owned by Warren Buffet

    Problems

    Fraud committed by 5,000 staff members over 5 year period


    $ 1.5 million unauthorized accounts created
    565 K unauthorized credit card accounts
    fake emails created
    unwanted debit cards issued

    Consequences

    Regulatory fine of $185 million


    Bank loses number one spot by market cap
    Reputational risk
    Head of retail resigned in July (but with huge payout)
    CEO called to testify before congress
    Questions

    1. How has Wells Fargo handled itself in the aftermath of the


    regulatory sanction?

    2. Should the CEO step down? Will the CEO step down?

    3. Should the compensation of senior executives be clawed back


    or reduced?

    4. What was the underlying cause of the problem in the first place?

    5. What are the lessons learned for an MBA from a career


    perspective?

    6. What steps could have been taken to prevent the fraud?

    7. Should the bank or any of its senior executives be subject


    prosecution or sanction?

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