5,300 Wells Fargo employees fired for creating over 2 million phony accounts without customers knowing it
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Reflexx
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PostPosted: Thu Sep 22, 2016 11:12 am    Post subject:

angrypuppy wrote:
Reflexx wrote:
angrypuppy wrote:
Reflexx wrote:


How about if employees stole credit cards and made purchases to make their store look more successful?


What if a startup food company ordered employees to go buy their products off the shelves of a major grocery chain, to artificially inflate revenues, enabling them to lure additional financing from venture capitalists?


Unethical, sure. But it's also something venture capitalists look into. Unless those employees are completely blowing their paychecks and take out personal loans every month for an extended period of time, it's not going to result in much funding, if any.

That money could have just been used as capital.

Not sure how this pertains to anything.



It's just a lead into a far more fun scandal:

How Hampton Creek Sold Silicon Valley on a Fake-Mayo Miracle

Quote:
In August the U.S. Securities and Exchange Commission and the Justice Department launched probes of Hampton Creek for possible securities violations and criminal fraud. The investigation follows an Aug. 4 Bloomberg article that revealed the company deployed a national network of contractors to secretly buy back Just Mayo from grocery store shelves. Hampton Creek denies any wrongdoing. When news of the SEC inquiry became public, the company’s founder and chief executive officer, Josh Tetrick, wrote in an e-mail, “We’re aware of the informal inquiry and we’ll be sharing the facts, as opposed to the inaccuracies reported by Bloomberg.” The company declined to comment on the DOJ investigation.

Tetrick used supermarket sales figures much as he used the environmental claims—to raise venture capital from a cast of billionaires including Salesforce.com founder Marc Benioff, tech investor Vinod Khosla, Hong Kong developer Li Ka-shing, and entrepreneur and venture capitalist Peter Thiel. Investments in the company have reached almost $220 million, he told his employees in an all-hands meeting a few days after the Bloomberg article appeared.



Quote:
In January 2014 a Creeker (edit note: company employee) on the West Coast, who asked not to be identified, received an assignment in an e-mail under the subject line “Secret Shopper Squad Stores.” She was directed to buy 20 bottles a week of Just Mayo from each Whole Foods store in a large territory. She was also told to hide what she was really doing. Under the heading “BACKSTORY,” the e-mail said, “You are working for a catering service, which chooses Just Mayo because of its amazing taste and because it is really good for people with allergies. We avoid saying the word vegan because we want everyone to think of Just Mayo as a mainstream mayo.”

After the secret purchases, the e-mail instructed, she should open one or two bottles at home to check for quality—specifically, whether the mayonnaise had separated. If the jars were all right, she could donate the rest to a food bank or give it to friends. “Do not return them to Whole Foods,” the e-mail said. It also included a link to a quality-assurance survey the Creeker was supposed to fill out for each store. But no one noticed when she didn’t do it. Within weeks she had bought so much Just Mayo that her friends and local food banks couldn’t handle any more, so she began dumping it. She spent almost $12,000 purchasing the product, she says, and she could tell the buybacks had nothing to do with quality control. “But I really didn’t think about it because I cared so much about the cause.”

With the buyback program in full swing, Tetrick celebrated the product’s success. “Wow! Some @WholeFoods are selling 100+ jars of #justmayo/day,” he tweeted on Jan. 30. Four months later, a company tweet said: “Proud to announce that #justmayo is now the #1 selling mayo at @wholefoods.”

By then, Tetrick had moved on to a much bigger conquest: Safeway stores. On April 22, Caroline Love, who ran Hampton Creek’s corporate partnerships and is now vice president for mission, sent an e-mail to a group of Creekers who’d been specially selected, she said, for the Safeway assignment. First, she thanked the unit, which became known inside Hampton Creek as the special projects group, for their “hard work in Whole Foods.” Then she tried to inspire them. “We are winning because of you,” she wrote. “We are reinventing the food system because of you. We are changing the world because of you.”

“This is mainstream,” she continued. To ensure “huge sales out of the gate” and “put an end to Hellmann’s factory-farmed egg mayo,” Love gave the Creeker elite five days to purchase “at least” 12 jars of Just Mayo at Safeway stores assigned to them. Use the self-checkout lane or multiple cashiers to avoid suspicion, she instructed. And don’t wear Hampton Creek gear—“This is an undercover project.” There was no pretense of quality monitoring. Subsequent assignments were for 20 jars per store.



Quote:
Ali Partovi suspected something was wrong shortly after joining Hampton Creek in September 2014. He and his twin brother, Hadi, are among Silicon Valley’s most successful angel investors. Their parents, scientists from Iran, fled the Islamic Republic when the boys were 11. Both earned computer science degrees at Harvard. In the 1990s, Hadi co-founded Tellme Networks, which he sold to Microsoft for $800 million; Ali co-founded LinkExchange, which Microsoft bought for $265 million. The brothers were early investors in Dropbox, Facebook, and Airbnb, among other companies, and founded the nonprofit Code.org, which promotes programming instruction in U.S. public schools.

A big believer in greening the food chain, and now an investor in Hampton Creek competitor Clara Foods, Ali Partovi grew smitten with Hampton Creek after meeting with Tetrick in 2013 and seeing his pitch deck. The Partovis invested in Hampton Creek in 2014. That September, Ali joined the company as a senior executive. His main responsibility was fundraising, particularly helping land Hampton Creek a “tech company valuation” in its next round, e-mails show.

Partovi dug in to the company’s financials. A week later, he sent Tetrick an e-mail documenting his belief that Hampton Creek was misleading investors and board members and risking potential fraud lawsuits. As of that August, the company was on pace to have less than $4 million in sales in 2014, not the $28 million projected in the pitch deck, and it was losing more than $2 million a month, according to an internal P&L statement. Partovi recommended revising the 2014 sales forecast for investors to $7 million to $9 million. Deceiving investors is a big mistake, he warned Tetrick. “This path is especially dangerous because the farther one goes down it, the harder it is to pull back,” he wrote. “Hadi and I personally feel duped.”


https://www.bloomberg.com/features/2016-hampton-creek-just-mayo/



The article is a tad ponderous, but it's a fun read. Despite the superficial attempt to make it look like a QC operation, the founder/CEO was clearly trying to dupe the investors in an attempt to lure more capital. It's almost comical.


The Wells Fargo case is more tragic than comical. The analogies in this thread are missing something key: You can go after management if they knew their sales targets were fraudulent. You can't go after management if they were blindly following bad numbers, and proving something akin to gross negligence by management will be a monumental task for the prosecutors. That's what makes it tragic, the branch minions were just fearing job loss, and thus pressured (but certainly not ordered) to commit fraud.


And these minions don't realize that their actions actually make their jobs harder. When they cheat to reach their goals, they give management the impression that the goals are attainable.
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PostPosted: Thu Sep 22, 2016 11:33 am    Post subject:

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And these minions don't realize that their actions actually make their jobs harder. When they cheat to reach their goals, they give management the impression that the goals are attainable.



That's exactly how it spiraled out of control. Branches A, B, C hit goal by cheating, putting the pressure and spotlight on the employees in branches D, E, and F.
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PostPosted: Thu Sep 22, 2016 1:14 pm    Post subject:

angrypuppy wrote:
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And these minions don't realize that their actions actually make their jobs harder. When they cheat to reach their goals, they give management the impression that the goals are attainable.



That's exactly how it spiraled out of control. Branches A, B, C hit goal by cheating, putting the pressure and spotlight on the employees in branches D, E, and F.


Interesting. So perhaps it is Branches A/B/C that should be held accountable for the actions of D/E/F?
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PostPosted: Thu Sep 22, 2016 2:55 pm    Post subject:

Quote:
Wells Fargo CEO, John Stumpf, under fire for a scandal in which bank employees opened millions of unauthorized customer accounts, has resigned from a national panel that discusses economic and banking issues with the Federal Reserve.

Stumpf was castigated by Senate Banking Committee members earlier this week for failing to stop the account-opening practices and for refusing to force senior executives to surrender pay for their roles in the scandal.


Stumpf Steps Down From Fed Panel
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PostPosted: Fri Sep 23, 2016 6:43 am    Post subject:

Aussiesuede wrote:
Quote:
Wells Fargo CEO, John Stumpf, under fire for a scandal in which bank employees opened millions of unauthorized customer accounts, has resigned from a national panel that discusses economic and banking issues with the Federal Reserve.

Stumpf was castigated by Senate Banking Committee members earlier this week for failing to stop the account-opening practices and for refusing to force senior executives to surrender pay for their roles in the scandal.


Stumpf Steps Down From Fed Panel


Good. This guy is clearly, at minimum, completely incompetent of running a major financial institution.
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PostPosted: Mon Sep 26, 2016 12:12 pm    Post subject:

Quote:
Former Wells Fargo employees who say they were fired for following the law have filed a class-action lawsuit seeking $2.6 billion in damages as the fallout continues over the creation of millions of secret, unauthorized bank accounts.

Two employees are named in the lawsuit, filed on behalf of all the bank's employees in the past 10 years who were penalized for not making sales quotas.

Quote:
The biggest victims of Wells Fargo's scam [are] the class of victims that were fired because they did not meet these cross sell quotas by engaging in the fraudulent scam that would line the CEO's pockets."





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PostPosted: Mon Sep 26, 2016 1:23 pm    Post subject:

Aussiesuede wrote:
Quote:
Former Wells Fargo employees who say they were fired for following the law have filed a class-action lawsuit seeking $2.6 billion in damages as the fallout continues over the creation of millions of secret, unauthorized bank accounts.

Two employees are named in the lawsuit, filed on behalf of all the bank's employees in the past 10 years who were penalized for not making sales quotas.

Quote:
The biggest victims of Wells Fargo's scam [are] the class of victims that were fired because they did not meet these cross sell quotas by engaging in the fraudulent scam that would line the CEO's pockets."





Fired for Refusing to Break the Law


Interesting. Are they actually claiming that they were told to break the law and were fired when they refused?

Or, are they claiming that they couldn't meet quotas without engaging in the practice and were therefore let go?

If it is the former, they definitely have a case.

EDIT: Nevermind. As is common with the internet these days, the title is a little misleading.

They are claiming the quotas were too hard to hit and were fired as a result.

I'm not sure if it is against the law to fire someone for not meeting a quota that is hard. Huge potential can of worms.

So they weren't really fired for not breaking the law, they were fired for not meeting their quotas. Which happens all the time. Now they're hopping on the bandwagon it seems like.
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PostPosted: Mon Sep 26, 2016 2:10 pm    Post subject:

Quote:
A big question is how to compensate people whose credit scores were hurt by what the bank did.

Regulators say that over a five-year period some 2 million credit card and deposit accounts were opened that may not have been authorized by the bank's customers.

Quote:
"If that account had an annual fee, the consumer doesn't know about this account, they don't pay the annual fee," says Chi Chi Wu, a staff attorney at the National Consumer Law Center. "So now the consumer has these late payments showing up on their credit report and that's pretty damaging."


Ira Rheingold, executive director of the National Association of Consumer Advocates, says that would have had a direct impact on someone's credit score.
Quote:
"You may not have qualified for a mortgage or you might have been dinged by getting charged a little higher interest rate because of what was reported wrongly on your credit report,"


Quote:
"I am telling you that if information was sent into the credit bureaus because of these falsely opened accounts, the impacts on this are far far far more than the fees or fines that could be associated with that,"


Wells Fargo is already contacting customers to find out whether they wanted the accounts opened in their names, and it has promised to do right by those who were hurt. But unwinding the damage won't be easy.

Quote:
"What happened to the consumer who, the employer looked at their credit report and didn't give them a job because they saw they had all these credit cards open? How do you figure that out?"



How does Wells Fargo calculate how much it owes someone who had to pay a higher mortgage rate because of the inaccurate information it sent to the credit bureau? It would mean contacting the person's lender and trying to determine why it charged the interest rate it did, and that would require a lot of detective work.

Wells Fargo says it wants to make good by its customers, but figuring out how to do that will be a tall task.


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PostPosted: Tue Sep 27, 2016 4:58 pm    Post subject:

Quote:
Wells Fargo CEO John Stumpf has agreed to give up $41 million in unvested stock awards following the board of directors' investigation into the bank's sales practices, the company said Tuesday.

Additionally, Carrie Tolstedt, Wells Fargo's former head of community banking, will forego all her unvested equity stock awards valued at $19 million and will not receive retirement benefits worth millions more. Tolstedt was responsible for the division during the time employees allegedly created sham accounts to meet sales targets. She has announced she will retire at the end of year.

Neither Tolstedt nor Stumpf will receive 2016 bonuses, the company said.

Wells Fargo has a clawback provision in place that triggers three levels of recoupment. For instance, misconduct that leads to financial restatements can trigger a clawback of bonuses. Incentive pay can be clawed back if financial information was inaccurate, even if the executives were not responsible. Lastly, shares issued for performance can be clawed back for a number of reasons including if executives' conduct caused "reputational" harm, "material error" or "improper or grossly negligent failure, including in a supervisory capacity," according to the company's proxy statement.

The stakes are large. Stumpf stood to walk from the bank with $123.6 million from accumulated stock, incentive pay and retirement payments when he retires, says compensation tracking firm Equilar. Stumpf was paid $82.9 million between 2012 and 2015. Tolstedt retired with an estimated payout of $91.2 million, Equilar says. She was paid more than $36 million between 2012 and 2015.


CEO To Lose at Least $41 million
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PostPosted: Tue Sep 27, 2016 7:54 pm    Post subject:

ringfinger wrote:
Aussiesuede wrote:
Quote:
Former Wells Fargo employees who say they were fired for following the law have filed a class-action lawsuit seeking $2.6 billion in damages as the fallout continues over the creation of millions of secret, unauthorized bank accounts.

Two employees are named in the lawsuit, filed on behalf of all the bank's employees in the past 10 years who were penalized for not making sales quotas.

Quote:
The biggest victims of Wells Fargo's scam [are] the class of victims that were fired because they did not meet these cross sell quotas by engaging in the fraudulent scam that would line the CEO's pockets."





Fired for Refusing to Break the Law


Interesting. Are they actually claiming that they were told to break the law and were fired when they refused?

Or, are they claiming that they couldn't meet quotas without engaging in the practice and were therefore let go?

If it is the former, they definitely have a case.

EDIT: Nevermind. As is common with the internet these days, the title is a little misleading.

They are claiming the quotas were too hard to hit and were fired as a result.

I'm not sure if it is against the law to fire someone for not meeting a quota that is hard. Huge potential can of worms.

So they weren't really fired for not breaking the law, they were fired for not meeting their quotas. Which happens all the time. Now they're hopping on the bandwagon it seems like.


Those who didn't opt to open fake accounts were fired, and those who told anyone about the ones opening fake accounts were also fired.
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PostPosted: Tue Sep 27, 2016 10:31 pm    Post subject:

GoldenChild wrote:
ringfinger wrote:
Aussiesuede wrote:
Quote:
Former Wells Fargo employees who say they were fired for following the law have filed a class-action lawsuit seeking $2.6 billion in damages as the fallout continues over the creation of millions of secret, unauthorized bank accounts.

Two employees are named in the lawsuit, filed on behalf of all the bank's employees in the past 10 years who were penalized for not making sales quotas.

Quote:
The biggest victims of Wells Fargo's scam [are] the class of victims that were fired because they did not meet these cross sell quotas by engaging in the fraudulent scam that would line the CEO's pockets."





Fired for Refusing to Break the Law


Interesting. Are they actually claiming that they were told to break the law and were fired when they refused?

Or, are they claiming that they couldn't meet quotas without engaging in the practice and were therefore let go?

If it is the former, they definitely have a case.

EDIT: Nevermind. As is common with the internet these days, the title is a little misleading.

They are claiming the quotas were too hard to hit and were fired as a result.

I'm not sure if it is against the law to fire someone for not meeting a quota that is hard. Huge potential can of worms.

So they weren't really fired for not breaking the law, they were fired for not meeting their quotas. Which happens all the time. Now they're hopping on the bandwagon it seems like.


Those who didn't opt to open fake accounts were fired, and those who told anyone about the ones opening fake accounts were also fired.


That's not what the suit is alleging. The suit is saying the sales goals were too high. Unrealistic. And that the only way to hit the goals was to engage in deceptive practices.

I'm just not sure that setting goals that are too high is illegal. Maybe it is, I'm just not sure that it is.

Now, if WF instructed employees to break the law, and then fired employees who refused, that would be grounds for wrongful termination.

I'm just not sure if a person has grounds to sue if an employer sets goals that are too high. Like, if you take a job and they say you have to sell a million cars or you will lose your job, can you sue? Maybe, I'm just not certain of that.
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PostPosted: Wed Sep 28, 2016 8:46 am    Post subject:

Illegal or not, if B of A fights the suit they will only be dragging their name farther into the mud. The smart move would be to settle somewhere in between $0 and what the lawsuit wants.
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PostPosted: Wed Sep 28, 2016 6:07 pm    Post subject:

venturalakersfan wrote:
Illegal or not, if B of A fights the suit they will only be dragging their name farther into the mud. The smart move would be to settle somewhere in between $0 and what the lawsuit wants.


B of A? They'd be better off letting Wells Fargo deal with that suit on their own!
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PostPosted: Thu Sep 29, 2016 5:48 am    Post subject:

ringfinger wrote:
venturalakersfan wrote:
Illegal or not, if B of A fights the suit they will only be dragging their name farther into the mud. The smart move would be to settle somewhere in between $0 and what the lawsuit wants.


B of A? They'd be better off letting Wells Fargo deal with that suit on their own!



A senior moment by VLF, but he could eventually be right. If Washington keeps green-lighting bank mergers, we'll end up with Bank of All-America.
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PostPosted: Thu Sep 29, 2016 6:58 am    Post subject:

angrypuppy wrote:
ringfinger wrote:
venturalakersfan wrote:
Illegal or not, if B of A fights the suit they will only be dragging their name farther into the mud. The smart move would be to settle somewhere in between $0 and what the lawsuit wants.


B of A? They'd be better off letting Wells Fargo deal with that suit on their own!



A senior moment by VLF, but he could eventually be right. If Washington keeps green-lighting bank mergers, we'll end up with Bank of All-America.


Hah. A lawsuit from victims of their activities? Absolutely. But one from former employees? Unless they were actually demanding the employees break the law they might want to look at that one.
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PostPosted: Thu Sep 29, 2016 10:57 am    Post subject:

ringfinger wrote:
venturalakersfan wrote:
Illegal or not, if B of A fights the suit they will only be dragging their name farther into the mud. The smart move would be to settle somewhere in between $0 and what the lawsuit wants.


B of A? They'd be better off letting Wells Fargo deal with that suit on their own!


Woops. I switched from Wells Fargo to B of A.
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PostPosted: Thu Sep 29, 2016 1:05 pm    Post subject:

Quote:
Wells Fargo & Co., reeling from weeks of pummeling over fraudulent customer accounts, was sanctioned by the Justice Department over improperly repossessing cars owned by members of the military.

Federal authorities are punishing the San Francisco-based lender for as many as 413 alleged violations of the Servicemembers Civil Relief Act, according to a statement Thursday from the Justice Department, which said the bank agreed to pay more than $4 million to compensate borrowers involved in unlawful repossessions spread over seven years. The bank’s regulator, the Office of the Comptroller of the Currency, also fined the company $20 million for a decade of transgressions, the agency said in a statement.

Quote:
Wells Fargo Bank unlawfully repossessed hundreds of servicemembers’ cars without the proper process, and the bank will now rightfully pay for its violations,” Bill Baer, the Justice Department’s No. 3 official, said in a statement. The department “is committed to protecting our country’s servicemembers as they continue to fight for our freedom.


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PostPosted: Thu Sep 29, 2016 1:15 pm    Post subject:

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The head of Wells Fargo took a brutal drubbing before a House panel Thursday as members of both parties called for his job and suggested he should face criminal charges.

But clear from the hearing was that Stumpf would find no quarter from either party, as lawmakers repeatedly painted his bank as having violated the public trust. Several described it as a “criminal enterprise.” On a committee that is usually strictly divided along partisan lines, there was broad unity in anger toward Stumpf and his bank.

Quote:
“Fraud is fraud, and theft is theft, and what happened at Wells Fargo over several years cannot be described any differently,” said Chairman Jeb Hensarling (R-Texas).


Quote:
“Let’s call it really what it is: some of the most egregious fraud we’ve seen since the foreclosure crisis,” said Rep. Maxine Waters (Calif.), the top Democrat on the panel. “Executive conduct at Wells Fargo deserves a thorough investigation.”


Waters even went so far as to say she now wants to break up Wells Fargo, calling it too large to effectively manage.

Lawmakers refused to believe that years of fraudulent activity somehow escaped the attention of top executives.

In fact, several lawmakers openly suggested that the bank had blatantly violated the law, with some going so far as to assert that Stumpf himself would be facing criminal charges in the near future.

Quote:
“You think today is tough? It’s coming. When prosecutors get a hold of you, you’re going to have a lot of fun,” said Rep. Michael Capuano (D-Mass.).



Quote:

“I have one simple question for you: When are you going to resign?” asked Rep. Roger Williams (R-Texas).


Rather than crediting the bank for cleaning house with its layoffs, several lawmakers expressed indignation, believing that the bank fired low-level employees struggling under aggressive sales targets to cover up for higher-level executives.

Lawmakers singled out Stumpf, accusing him of being either complicit in the activity or woefully unaware of what was happening at the bank he ran.

Rep. Carolyn Maloney (D-N.Y.) questioned why Stumpf personally sold $13 million in company stock roughly around the same time he said he first learned of problems at his bank. Stumpf said he currently held four times the level of stock required of him but acknowledged selling off those shares.

Quote:
“The timing is very, very suspicious,” Maloney said.


Several members in both parties said Wells Fargo’s actions threatened to undercut the trust at the heart of the banking system in the U.S.

Some Republicans argued that regulators should have sniffed out the problems at the bank sooner. Other conservative who typically advocate for a light regulatory touch said their case was made significantly tougher by Stumpf’s bank.

Quote:
“I came to Congress to deregulate, and because of your actions that’s been made very difficult,” Williams said.


When asked about his own personal future with the company, he deferred to either the bank’s board — which he chairs — or other actors.

Rep. David Scott (D-Ga.) directly asked Stumpf at one point if he broke the law.
Quote:

“I’m not a criminal lawyer,” he said. “I led the company with courage.


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PostPosted: Wed Oct 12, 2016 2:08 pm    Post subject:

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John Stumpf, who led Wells Fargo & Co. through the financial crisis and built it into the world’s most valuable bank, stepped down as chief executive officer and chairman, bowing to public outcry over legions of accounts opened by his employees for customers who didn’t request them.

Stumpf, 63, is retiring from both posts effective immediately, the bank said Wednesday in a statement. Tim Sloan, 56, the company’s president and chief operating officer, will succeed him as CEO. Lead director Stephen Sanger will serve as the board’s non-executive chairman.


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PostPosted: Wed Mar 01, 2017 1:01 pm    Post subject:

Whoever said all good times must come to an end?

Wells Fargo Warns a Deeper Review May Uncover More Bogus Accounts
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PostPosted: Wed Mar 01, 2017 2:24 pm    Post subject:

Quote:
In the other matter, Wells Fargo said it discovered overseas banks were using its software tools to help finance trade with countries and entities subject to U.S. sanctions. Wells Fargo said it alerted the Treasury Department’s Office of Foreign Assets Control and is cooperating with a Justice Department inquiry.


Just get Flynn & Tillerson to lift the sanctions and they should be on the up and up.
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splashmtn
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PostPosted: Sun Mar 05, 2017 10:40 pm    Post subject:

ringfinger wrote:
Aussiesuede wrote:
Quote:
Former Wells Fargo employees who say they were fired for following the law have filed a class-action lawsuit seeking $2.6 billion in damages as the fallout continues over the creation of millions of secret, unauthorized bank accounts.

Two employees are named in the lawsuit, filed on behalf of all the bank's employees in the past 10 years who were penalized for not making sales quotas.

Quote:
The biggest victims of Wells Fargo's scam [are] the class of victims that were fired because they did not meet these cross sell quotas by engaging in the fraudulent scam that would line the CEO's pockets."





Fired for Refusing to Break the Law


Interesting. Are they actually claiming that they were told to break the law and were fired when they refused?

Or, are they claiming that they couldn't meet quotas without engaging in the practice and were therefore let go?

If it is the former, they definitely have a case.

EDIT: Nevermind. As is common with the internet these days, the title is a little misleading.

They are claiming the quotas were too hard to hit and were fired as a result.

I'm not sure if it is against the law to fire someone for not meeting a quota that is hard. Huge potential can of worms.

So they weren't really fired for not breaking the law, they were fired for not meeting their quotas. Which happens all the time. Now they're hopping on the bandwagon it seems like.
here's the key to a case like this.

If these people can find a statistical pattern between those that made the quotas and those breaking the law ... they just might be able to win a case against the bank.
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