You may recall that last fall, Wells Fargo went through a round of bad publicity stemming from the revelation that thousands of employees had set up millions of fake accounts so they could meet quotas and get bonuses for creating new business. Former employees sued within a few weeks, saying the company pushed them to do it, Congress grilled their CEO, and California launched a criminal inquiry. On Monday, the Washington Post reported that the bank’s internal report had been completed and it was pretty damning: Not only will two executives have to return $75 million in compensation, but the report determined that the bank knew about the fake account epidemic all the way back in 2002.
The report identifies the autonomy given to executives, who saw the fake accounts as “minor infractions and victimless crimes,” as a key mitigating factor. “The Community Bank identified itself as a sales organization, like department or retail stores, rather than a service-oriented financial institution,” the report reads. “This provided justification for a relentless focus on sales, abbreviated training and high employee turnover.”
Tim Sloan, the new CEO, who came out of the report relatively unscathed, issued the following statement:
We accept the Board’s findings as a critical part of our journey to rebuild trust. The Board’s comprehensive findings provide another important opportunity to learn from our mistakes and take action to improve the way we operate, serve customers, and lead our team members.
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