The Legal Ramifications of Lax Oversight at Wells Fargo
Wells Fargo has received its fair share of public scrutiny lately due to lax oversight and various legal violations associated with overseeing banking practices and the bank’s sham accounts scandal. Starting around 2004, internal investigations revealed an increase in “sales gaming cases,” whereby bankers were moving money into and out of customer accounts in order to make sales goals. All in all, it is estimated that Wells Fargo employees opened approximately 1.5 million bank accounts and applied for more than 560,000 credit cards that may not have been authorized by customers. Perhaps most disturbingly, bank executives (most notably, the former chairman/chief executive officer and former head of the retail branch network) swept evidence of these practices under the rug, claiming that there were no serious, negative repercussions for customers. Many employees also reported feeling significant pressure to engage in these practices in order to meet sales goals. Ultimately, in failing to undertake a proper investigation and involving outside counsel in order to do so, those in charge were simply too late and too slow to take a close look at the company’s basic business model. When the scam ultimately caught up with the company, regulators assessed millions of dollars in fines and Wells Fargo’s reputation was arguably permanently affected. Sales Goals & Stimulated Funding One of the practices that the company engaged in is called stimulated funding, whereby employees transfer funds from one customer account to another in order to make a less active account appear to be “funded” by a customer. Some of the employees implicated in the scam responded that the pressure to meet specific goals was so high—whereby daily and monthly “motivator” reports were constantly pitting one branch and region against another—that they experienced health problems as a result. Each January, bankers were even encouraged to submit lists naming family and friends who might open up accounts with Wells Fargo. The pressure was so strong that some would even postpone officially opening up accounts that had originally been opened in December – until January – just so that they would meet their January goals. Specific Legal Violations The lawsuit brought against Wells Fargo alleges unlawful business practices, amongst other allegations. However, financial institutions that engage in practices like these also risk being prosecuted under the Racketeer Influenced and Corrupt Organization (RICO) Act for fraud—both mail and securities fraud—amongst other aspects. There have also been rumors that whistleblowers were intimidated or fired, which violates federal law as well. 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Resources: nytimes.com/2017/04/10/business/dealbook/11wells-fargo-account-scandal.html?ref=business&_r=0 latimes.com/business/la-wells-fargo-live-updates-stumpf-ceo-could-wells-fargo-be-proscecuted-for-1475167015-htmlstory.html Tags: Consumer Protection Claim Defense, Florida Business and Corporate Lawyer, Florida Business and Corporate Lawyers, Wells Fargo Posted in Business Corporate | No Comments » Connect with us Archives May 2026 April 2026 March 2026 February 2026 January 2026 December 2025 November 2025 October 2025 September 2025 July 2025 June 2025 January 2025 January 2024 December 2023 November 2023 October 2023 September 2023 August 2023 July 2023 June 2023 May 2023 April 2023 March 2023 February 2023 January 2023 December 2022 November 2022 October 2022 September 2022 August 2022 July 2022 May 2022 April 2022 March 2022 November 2021 October 2021 September 2021 August 2021 July 2021 May 2021 April 2021 March 2021 February 2021 January 2021 December 2020 November 2020 October 2020 August 2020 July 2020 June 2020 May 2020 April 2020 March 2020 February 2020 January 2020 December 2019 November 2019 October 2019 September 2019 August 2019 July 2019 June 2019 May 2019 April 2019 March 2019 February 2019 January 2019 December 2018 November 2018 October 2018 September 2018 August 2018 July 2018 June 2018 May 2018 April 2018 March 2018 February 2018 January 2018 December 2017 November 2017 October 2017 September 2017 August 2017 July 2017 June 2017 May 2017 April 2017 March 2017 February 2017 January 2017 December 2016 November 2016 October 2016 November 13 Categories Alimony Appellate Arbitration Auto Accidents Auto Insurance Business Corporate Business Insurance Law Child Custody Child Support Criminal Law Divorce Family Law FEMA Insurance Payments Florida’s Mandatory 2‑Hour Legal Professionalism CLE: Foreclosure Defense Fort Myers Hurricane Insurance Attorney General Guardianship HD Law Partners Service HOA/Property Management Homeowners Association Homeowners Insurance Hurricane Claims Hurricane Insurance Insurance Bad Faith Insurance Claims Insurance Defense Insurance Litigation Landlord Tenant Law Enforcement Liability Loan Modifications Mold Water Damage Parental Rights Paternity Personal Injury Premises Liability Law Prenuptial Agreements Private Security Property Distribution Property Owner Law Sarasota Insurance Litigation Attorney Slip Fall Tampa Business and Corporate Attorneys tampa family attorney Tampa Insurance Attorneys Timeshare Timesharing Uncategorized HD Law Partners is proud to be your trusted full-service law firm Quick Links Property & Casualty Business & Corporate Litigation Family Law Contact Us Careers Get In Touch 2002 North Lois Avenue Suite 510 Tampa, FL 33607 813-253-5333 Contact Us