Ethical Scandal and Implications Discussion in Business Field
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The Implications of Ethical Scandals in Modern Businesses
Introduction
The financial services provider corporation Wells Fargo, with its headquarters in California, is involved in the ethical scandal in business that I will be outlining. The business offers a range of financial services, including business bank accounts, investment advice, mortgage services, and home loans. In 2016, Wells Fargo was charged with publishing over 1.5 million fictitious bank accounts. Additionally, the business participated in unethical cross-selling and early coverage. Selling products and account holders to bank clients was known as cross selling. As a result, the company’s staff created fictitious accounts in order to cross-sell. Wells Fargo’s senior management has been charged with orchestrating the cross selling of phony accounts. The business did not ask clients’ permission before creating the fictitious accounts. The employees billed the fictitious accounts incorrectly. The workers received bonuses because of opening the accounts. In 2020, the business was once more charged with maintaining over 3 million fictitious accounts. The customers filed lawsuits regarding additional fees they were charged as well as unauthorized credit card withdrawals.
The corporation consequently had to deal with a variety of repercussions, including ethical and legal ones (Lilly et al., 2021). The CEO resigned because of the first scandal of 2016, and the top management was replaced. Additionally, Wells Fargo Company was subject to legal lawsuits and was fined millions of dollars. For instance, the Controller of the Currency Department fined them millions of dollars. Additionally, SECP levied 2.5 million dollar penalties. The business was forced to settle the dispute through civil and federal lawsuits. Authority for $3 billion. Additionally, a payment of $2.7 billion was made to the clients. After the lawsuits that have been filed in federal courts (Roy, 2018).
I advise government institutions to create policies to guard against unauthorized business activities. Additionally, the banks need to actively participate in checks and balances. A governing, institutional body must exist to monitor operations and uphold the business’s moral behavior. States should strictly enforce the use of legal means to combat ethical transgressions. Modern banks have digital technology that needs to be integrated with governmental organizations.
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References
Lilly, J., Durr, D., Grogan, A., & Francis Super, J. (2021). Wells Fargo: Administrative evil and the pressure to conform. Business Horizons, 64(5). https://doi.org/10.1016/j.bushor.2021.02.028
Roy, R. (2018). The Cutting Edge of Performance? A Look at Wells Fargo. Performance Improvement, 57(2), 43–44. https://doi.org/10.1002/pfi.21730