Accounting Scandal
Instructions
Before you write this case report, you need to read The Leadership Blind Spots at Wells Fargo and Sales Misconduct at Wells Fargo Community Bank. While reading these articles, consider these questions: How did the culture in upper management and on the board lead to them first dismissing concerns about the ethical breach, and then later addressing the unethical behavior slowly and ineffectively? What pressures and cultural elements made them behave this way?
Answer
For years, the board of Wells Fargo was aware of the malpractice of employees opening fake accounts in order to drive up the sales goals. This was a result of extreme pressures from their managers. Although several employees had been flagged for the malpractice, the board did not do anything to curb it until it was too late. The former CEO, Stumpf, was aware of the issue from 2013 but did nothing. It took a full two years for him to order an investigation on the impacts the fake accounts had on the clients.Despite knowing about the fraud for a long time, the CEO and the board did not take drastic actions to prevent it. This occurrence can be explained with a few reasons. One of the reasons was the pressure to meet marketing goals. As the employees created fake accounts, the marking targets...
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