Consumer Fraud

Wells Fargo Execs Address Whistleblower Complaints, Ethics Problems

Wells Fargo fraud Wells Fargo Execs Address Whistleblower Complaints, Ethics ProblemsThe Chief Executive Officer of Wells Fargo & Co. told a gathering of employees earlier this month that the bank plans to change how it handles whistleblower complaints after several employees complained of facing retribution for reporting sales abuses to an ethics hotline.

Speaking to about 2,000 Wells Fargo employees in Des Moines, Iowa, CEO Tim Sloan did not offer any details about the San Francisco-based bank will address whistleblower complaints in the future, but his talk was part of a nationwide “conversations tour” he and other executives have embarked on to boost employee morale and restore public trust.

In September, Wells Fargo agreed to pay the U.S. $185 million in penalties and $5 million to customers it defrauded by pressuring employees to meet sales quotas by opening fake customer accounts. The scheme was so common that it led to the creation of more than two million checking, savings, and credit card accounts using customers’ personal information without their consent. The bank then charged customers fees for maintaining the accounts.

Several whistleblowers who called an internal ethics hotline Wells Fargo maintained alleged they were fired in retaliation for voicing their objections to the bank’s business practices.

“We’ve heard very concerning reports that there have been cases where the EthicsLine did not serve as the safe haven it is intended to be, and also heard allegations that some team members experienced retaliation after having contacted the EthicsLine,” Mr. Sloan said.

He added that he thought the “majority of cases were handled appropriately” but that there were some questionable cases that require “further investigation.”

Wells Fargo is also reaching out to many of its customers and partners to answer questions and apologize for its behavior as part of its damage-control operations.

According to a Bank Investment Consultant, since the September settlement with federal regulators, “the bank has been besieged by formal and informal investigations launched by federal, state and local government agencies, including the Department of Justice, the SEC [Securites and Exchange Commission] and state attorneys general and prosecutors’ offices, as well as Congressional committees.”

The bank also faces a class-action lawsuit brought by former Wells Fargo employees who claim to have suffered demotion, termination, and other forms of retaliation for refusing to participate in the unlawful sales practices. The lawsuit alleges the bank violated the Dodd-Frank Act’s whistleblower protections and seeks $7.2 billion in damages.

Sources:
Bank Investment Consultant
The Charlotte Observer
Reuters
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