Wells Fargo: Fall from great to miserable: A case study on corporate governance failures

R Veetikazhi, G Krishnan - South Asian Journal of Business …, 2019 - journals.sagepub.com
South Asian Journal of Business and Management Cases, 2019journals.sagepub.com
This case study examines corporate governance issues at Wells Fargo and Company. The
bank was embroiled in controversies due to its cross-selling tactics and the enormous
pressure the management exerted on the employees to ensure its success. Investigations by
media, followed by statutory agencies, revealed the creation of fake accounts without the
knowledge of the customers, sometimes forging their signatures. The CEO of the bank had
to resign after facing a hostile US Senate Banking Committee hearing. Wells Fargo had to …
This case study examines corporate governance issues at Wells Fargo and Company. The bank was embroiled in controversies due to its cross-selling tactics and the enormous pressure the management exerted on the employees to ensure its success. Investigations by media, followed by statutory agencies, revealed the creation of fake accounts without the knowledge of the customers, sometimes forging their signatures. The CEO of the bank had to resign after facing a hostile US Senate Banking Committee hearing. Wells Fargo had to pay a fine of USD185 million to various statutory agencies. The board used clawback provisions on the CEO and the head of Community Bank. The latter was held responsible for the audacious sales culture which resulted in sales integrity issues. Wells Fargo seemed to have a perfect board, a lead director and a much acclaimed CEO, apart from seven board committees. External auditors were one of the ‘big fours’. This case is intended to stimulate discussion in the class on why corporate governance practices fail, despite a seemingly healthy governing structure.
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