ETHICAL DILEMMA CASE
WELLS FARGO BANKING SCANDAL – Why culture matters
Markkula Center for Applied Ethics at Santa Clara University
Wells Fargo was the darling of the banking industry, with some of the highest returns on equity in the sector
and a soaring stock price. Top management touted the company’s lead in “cross-selling”: the sale of additional
products to existing customers. “Eight is great,” as in eight Wells Fargo products for every customer, was CEO
John Stumpf’s mantra.
In September 2016, Wells Fargo announced that it was paying $185 million in fines for the creation of over 2
million unauthorized customer accounts. It soon came to light that the pressure on employees to hit sales
Wells Fargo also confirmed that it had fired over 5,300 employees over the past few years related to shady
sales practices. CEO John Stumpf claimed that the scandal was the result of a few bad apples who did not
honor the company’s values and that there were no incentives to commit unethical behavior. The board initially
stood behind the CEO but soon after received his resignation and “clawed back” millions of dollars in his
compensation.
Further reporting found more troubling information. Many employees had quit under the immense pressure to
engage in unethical sales practices, and some were even fired for reporting misconduct through the company’s
ethics hotline. Senior leadership was aware of these aggressive sales practices as far back as 2004, with
incidents as far back as 2002 identified.
The Board of Directors commissioned an independent investigation that identified cultural, structural, and
leadership issues as root causes of the improper sales practices. The report cites: the wayward sales culture
and performance management system; the decentralized corporate structure that gave too much autonomy to
the division’s leaders; and the unwillingness of leadership to evaluate the sales model, given its longtime
success for the company.
https://www.scu.edu/ethics/focus-areas/business-ethics/resources/wells-fargo-banking-scandal/ (Links to an
external site.)
In a 750-word write a good research paper that addresses the four questions below. You must use paragraphs
and double spacing. Font size is Times New Roman 12.” Use at least for different works of other authors to
support your work. Find on page 3 of this instruction booklet acceptable materials you can use to support the
essay. One of the four works of other authors you must use is the text we use in class.
Robbins, S.P. & Judge, T.A. (2019). Organizational Behavior. New York, NY: Pearson.
After exhausting the mandatory four literature sources (see page 3 below); you are free to use any other
material you feel strengthens your work. The required writing convention is American Psychological
Association (APA) style
https://owl.purdue.edu/owl/research_and_citation/apa_style/apa_style_introduction.html (Links to an external
site.)
Please, use Microsoft World Document when submitting this assignment.
1.1 Identify and explain ways in which the expectations of the company’s major stakeholders conflicted with
each other. You need to discuss the different expectations of at least 3 different stakeholders.
1.2 Discuss the different consequences of ethical breaches that the company made in this case.
2.1 Identify aspects of the organizational culture and context that contributed to the unethical behavior in this
case.
2.2 Using at least two of the 3 ethical decision making criteria (utilitarianism, moral rights, or justice), suggest
actions that would contribute to more ethical conduct in the future.
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Resources for Your Essay
Robbins, S.P. & Judge, T.A. (2019). Organizational Behavior. New York, NY: Pearson.
Senator Elizabeth Warren questions Wells Fargo CEO John Stumpf at Banking Committee Hearing 17:52
Senator Elizabeth Warren’s two round of questions for Wells Fargo CEO John Stumpf at the September 20,
2016 Senate Banking Committee hearing entitled: “An Examination of Wells Fargo’s Unauthorized Accounts
and the Regulatory Response.”
Senator Elizabeth Warren questions Wells Fargo CEO John Stumpf at Banking Committee Hearing (Links to
an external site.)
Senator Elizabeth Warren questions Wells Fargo CEO John Stumpf at Banking Committee Hearing
Wells Fargo Whistleblower Speaks Out (August 3, 2018) 7:52
https://www.cbsnews.com/news/whistleblower-wells-fargo-fraud-could-have-been-stopped/ (Links to an
external site.)
The Case against Wells Fargo (43:00 – a portion of this episode)
https://www.cbs.com/shows/whistleblower/video/vjkquVEslKcBesPvn44V0M16vvCoba6S/whistleblower-thecase-against-the-cardiologists-and-the-case-against-wells-fargo/ (Links to an external site.)
https://sandiegofreepress.org/2016/09/an-insiders-story-about-scams-at-wells-fargo-bank-ashforduniversity/#.XKzowChKhPY (Links to an external site.)
Other Relevant Materials
Article: Wells Fargo fighting order to rehire whistleblower (Sept. 27, 2017)
https://www.americanbanker.com/news/wells-fargo-fighting-order-to-rehire-whistleblower (Links to an external
site.)
Article/Video: More Wells Fargo workers allege retaliation for whistleblowing (Nov. 7, 2017) 3:48
https://money.cnn.com/2017/11/06/investing/wells-fargo-retaliation-whistleblower/index.html (Links to an
external site.)
Article: What can business learn from the Wells-Fargo ethical debacle? (September 2016)
https://josephsononbusinessethics.com/2017/04/can-business-learn-wells-fargo-ethical-debacle/ (Links to an
external site.)
Wells Fargo TV Commercial, ‘Earning Back Your Trust’ Song by The Black Keys (2019) 1:00
https://www.ispot.tv/ad/dVfX/wells-fargo-earning-back-your-trust-song-by-black-keys (Links to an external site.)
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Video: Wells Fargo CEO grilled by legislators during hearing (March 12, 2019) 1:48
Wells Fargo CEO grilled by legislators during hearing (Links to an external site.)
Wells Fargo CEO grilled by legislators during hearing