Wells Fargo Corporation Case Study Help

Debt position

In the year 2018, the amount of total liabilities was$1,698,817,which increased to $1,739,571 in the year 2019. Although the assets are more as compared to liabilities at this point i.e. $1,927,555. But, a significant increase in the total liabilities would require the organization to sell its assets in order to pay its debt, which is considered to influence the financial position of the organization. Currently, the organization has enough assets to pay its debt,which means that the organization is financially stable in terms of debt position.

Forces that drove fraud

The environment of the organization was referred to as the pressure-cooker environment in the court papers,because the employees who offered their services at low-levels were consistently squeezed tighter and tighter, followed by an increase in sales goals. The consistent increase in the sales goals was nearly unrealistic and hard to achieve. Due to this reason, fake accounts’ fraud took place in the organization. Thus, the forces that drove the occurrence of fraud in the organization were tighter goals, squeezed low-level employees and ignoranceof signs,which represented the sales goals as unrealistic. (Flitter, 2020)

Fraud uncovering

However, the scope of the fake account scandal was shocking for the organization itself. The fraud uncovering was based on the analysis,which was conducted by a consulting who was hired by the organization in regards to evaluate the bank accounts, bill payments and sales. The analysis by the consulting firm concluded the opening of more than 1.5 million unauthorized deposit accounts. (Egan, 5,300 Wells Fargo employees fired over 2 million phony accounts, 2016)The analysis was based on the data from the year 2009 to mid-2015 period. (Egan, 2017)

Scams

The scams mainly included the opening of new fake accounts in order to meet the sales targets set by the organization. Due to this reason, the sub-activities of the fake accounts scam included online bill payments, additional fees and transfer of money from original accounts to fake accounts.

Who was involved?

The management of the organization was involved in performing such actions. Whereas upon evaluation of the outcomes; the board of directors were well-aware of the issues they had been facing, but the information was never disclosed to the investors.

Executive level of company

Organizational Structure

The organizational structure of the organization is based on multidivisional approach similar to the structure of other large banks. Recent changes in the organizational structure provided the organization with the capability to pursue goals in more effective manner and take advantage of the possible opportunities. The creation of flatter business line structure of the organization tends to provide the organization and its management with clarity, responsibility, accountability and authority. (Officials, Wells Fargo Announces Organizational Changes, 2020)

Structure of Board of Directors

The structure of board of directors has represented a five-line change, followed by four business CEOs, which mainly includedMary Mack, Perry Pelos, Jon Weiss,and Mike Weinbach. All the business CEOs would report the structure of Well Fargo’s board of directors to the CEO of Wells Fargo,although there are number of board of directors responsible to operate and manage the business operational decision in the organization.

Personal Background and Interconnections

All the employees involved in sales were low-level employees who were not paid high wages as per their needs. The reward system was also based on achieving the sales target, which was increased by the organization,over the course of several years. The employees made interconnections with other employees to make fake accounts and move the money from the existing accounts to the new ones, by pinning technique. The representation of unusual fees on the accounts, created an alarming situation for the organization to notice such unethical and illegal approach. (Kelly, 2020).....................................

 

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