Currently there is a fraud case that has been in the news. Wells Fargo is currently under investigation for fraud. Right now the information that has been released is the fact that many fake accounts were created at Wells Fargo banks so that numbers were met by bank employees. The bank’s now former Chief Executive Officer John Stumpf, had know “of problems in 2013, but the bank never disclosed that information to investors until Wells Fargo settled with regulators and the Los Angeles city official on Sept. 8.” (Glazer, E., 2016). There is also question if Wells Fargo had “violated whistleblower-protection laws by firing employees who tried to report misconduct.” (Glazer, E., 2016).
Wells Fargo is looking at potential fraud against the CEO and CFO signing off on financial statements that were inaccurate, failure to disclose the discovery of the fake accounts, and potentially violating whistleblower protections laws. There appears to be a level of knowledge of wrong-doing because as we have seen in the past with other companies, the CEO has resigned along with other managers, and they have received a “golden parachute” with their exit and stock bonuses.
Because this is a fairly recent event, we are not sure what the outcome will be. Nor do we know what the impact of the audit on Wells Fargo will be following the review from the SEC. The scope of the fraud is still growing and we will hopefully know the full scope in the coming months.
Question
Can you speculate on the case some or suggest what some of the issues may be and/or what the implications of this case might be?
It seems that Wall Fargo had a corrupt bank culture where employees were encouraged to open fake customer accounts.