Sales Trumped Ethics at Wells

What happened at Wells Fargo? In the past, this well-respected bank proudly touted its ethics culture. Even in the face of internal complaints and external questions, it continued to assert that “Wells Fargo has long had a strong code of ethics which has served us well, and ethical business practices are a cornerstone of our culture,” (Campbell, 2013).

Seemingly, it did and does. It provides employees (and the public) with a detailed code of ethics (see Our Code of Ethics and Business Conduct), which is also available on the “leadership and governance” web page. Employees receive an employee handbook (updated in 2016), which refers back to the code of ethics throughout, and they have access to the “Office of Global Ethics and Integrity” and to an ethics hotline.

Three years ago, as Campbell reported, Wells Fargo created an Ethics Program Office to initiate an internal review of the bank’s ethics. In doing so, it was taking the kind of action most ethics officers would recommend in response to concerns.

Yet, over a five-year period it has fired 5,300 employees for fraudulently opening more than two million accounts (and collecting the related fees) without customer knowledge or approval. It will now pay over $185 million in fines related to this unethical behavior, its market value has dropped significantly in the immediate aftermath, its CEO John Stumpf has been called to a Senate banking committee hearing on the issue, and the bank has damaged its reputation and the reputations of its leaders and staff.

Why? Were 5,300 rogue individuals perpetrating a fraud on the bank and its customers, unbeknownst to almost everyone else? Or was the fraudulent behavior the result of a sales culture’s unintended consequences?

Despite Stumpf’s assertion that “There is nothing in our culture, nothing in our vision and values that would support [the fraudulent behavior] (Helsel, 2016), many business news sources point to an aggressive sales culture that set almost unattainable goals and pushed staff to “do whatever it takes” to deliver on them (see Egan, 2016; Rucker and Freed, 2016).

This is, sadly, not uncommon. As mentioned in one of our blog posts (Ethics and Money, May 20, 2016), a recent study reports that more than half of the surveyed chief compliance officers said people fear losing their jobs if they don’t meet sales targets. Almost as many of the CCOs believe that sales pressure and incentives are two of the biggest challenges when trying to reduce the risk of bribery and corruption.

It takes close attention and direction from leaders and boards of directors to ensure that the push to achieve sales does not overwhelm the need to avoid fraud and the desire to be an ethical workplace. Wells Fargo is learning that lesson very publicly.

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Egan, Matt. “Workers Tell Wells Fargo Horror Stories.” CNN Money, September 9, 2016.

Campbell, Dakin. “Wells Fargo Plans Ethics Review amid Bank Scrutiny.”, December 10, 2013.

Helsel, Phil. “Wells Fargo CEO Will Face Elizabeth Warren, Other Senators at Sept. 20 Hearing.” NBC, September 14, 2016.

Rucker, Patrick and Dan Freed. “Wells Fargo will pay $190 million to settle customer fraud case.”, September 9, 2016.