Blog 8- Financial Fraud and Wells Fargo

The big question is whether fraud in the business world still occurs? Sadly it does and in very prevalent companies. For example Wells Fargo, the American based finance company, in 2016 reports emerged that employees had created fake bank accounts without customers knowing or consenting. The most concerning piece of information I learned from the Wells Fargo scandal was that over 5,300 employees were fired from their jobs relating to the scandal. If 5,300 people were involved how had this been allowed to happen? How had no one spotted these fake accounts earlier? I am still shocked that this level of fraudulent behaviour was able to occur in such a large well known company within America.

However, that was not the most shocking fact of this scandal, Wells Fargo admitted to retaliating against workers who tried to inform them about the fake accounts early on in the scandal. The fact that this occurred shows the level of corruption within the company was extremely high and involved top management and directors. This should never have been allowed to occur, the information that they employees shared and their identities should have remained anonymous, in my opinion this would have allowed more employees to come forward without the fear of being retaliated against. In my opinion to prevent this level of fraud happening again in other companies, whistle-blowing should remain anonymous and actually should be made to someone outside of the company to prevent it being brushed under the carpet which clearly happened in the Wells Fargo case.

It is clear that within Wells Fargo there was a large proportion of employees who were corrupt, I believe that by firing that large amount of people who were involved they can create a better working ethic within the company environment, hopefully those who were employed to replace the 5,300 fired employees had substantially better morals.

How was this not seen? And how can it be prevented from happening again? As a previously stated firing staff allowed Wells Fargo to be rid of the “rotten” core of the businesses ethics, when these scandals occur it is important to act fast. By acting fast you are able to maintain some sort of relationship with the customer as it appears as though you are solving the problem. Restricting access to certain information and preventing certain levels of employees from creating accounts without approval from management, this will help to prevent the widespread fraudulent activity seen within Wells Fargo. Also, having external auditors can prevent financial fraud occurring within your business, perhaps the fraud occurring in Wells Fargo could have been stopped and prevented sooner through the use of a regular external auditor.

The level of fraud and moral corruption within Wells Fargo has astonished me, and I cannot understand how these levels of fraud were not picked up sooner, hopefully we will never see the likes of these level occur again. However, fraud levels are rising and in the UK they hit over £2billion which shows that financial fraud occurs around the world and doesn’t appear that it will slow down anytime soon. I believe that more regulations need to be put into place as well as harsher punishments to help prevent financial fraud within companies.