2016 Wells Fargo Scandal and How it Still Affects Financial Institution Today

Wells Fargo Scandal
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Wells Fargo Scandal
Summary of the Event
The recent event analyzed in this essay is the Wells Fargo scandal discovered in 2016 and is still affecting the financial institution. In 2016, Wells Fargo's clients started to notice a trend of getting unexpected credit cards and, at times, charged fees they did not anticipate (Tayan, 2019). The complaints prompted several agencies, such as the Consumer Financial Protection Bureau, to investigate the matter. By the end of 2016, the investigators found that the bank employees had opened more than 2 million fake accounts without their customers' authorization. In the preceding years, the scandal became more extensive as the investigative agencies discovered an additional 1 million accounts had been opened and clients had been charged loans and insurances that they did not need. At the beginning of the investigation, only the junior employees were punished over the scandal. However, the top management has had to pay fines over the years while other people have been fired for their involvement in the scandal. The company has been charged $185 million for this scandal (Tayan, 2019). Their asset growth has also been limited, and they are expected to corporate with the authorities fully in the future in case of any investigations.
Two Key Take-Aways
Ethics is a significant concept in corporate finance that can be used to analyze the scandal in Wells Fargo. Ethics acts as a moral guideline that dictates how an organization should conduct itself (Nalukenge et al., 2018). After reading the concept of ethics and the scandal in Well Fargo, the first takeaway is that the failure to conduct oneself in a manner acceptable by clients and the authorities may lead to the collapse of an organization. There a...