AN ORGANIZED CRIME STORY, WELLS FARGO

The opening of unauthorized accounts at Wells Fargo is one of today’s hot issues. A brief of the event is; thousands of employees of the Bank enrolled clients in unauthorized accounts, sometimes transferring funds without clients’ permission, to hit sales targets and receive bonuses for opening new accounts. The event costs Wells Fargo 190 million USD of which 185 million USD is for fines, while the rest 5 million USD is recorded as provision for the customers harmed by the event.

Event is being intensely discussed and examined by the sector. Some mention weak ethical values and corporate culture of the bank though they have strong risk management systems, some criticize unreachable sales targets and corresponding incentive systems, some think it is a world where subordinates are fined whereas executives stay free etc. At the end, almost everybody thinks there will be regulatory results of this and some new regulations will follow.

More or less, we all get used to “internal fraud” events in the financial institutions which are triggered by incentives. What makes this event distinctive and scary is a huge number of employees joining to the scheme in a collaborative and organized way. Unfortunately, incentives seem to poke human greed and cheating spirit rather than stimulating hard work and will to be better.

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