SEC Investigating Wells Fargo Fraudulent Practices
Customers of Wells Fargo have plenty of reasons to be upset as the international banking company is making headlines for all the wrong reasons. In September, Wells Fargo paid $185 million to the Government for fraudulently opening more than 1.5 million accounts without customers’ knowledge. Now the SEC is getting involved, and Wells Fargo may be forced to pay hundreds of millions more.
The company is also facing Congressional scrutiny over the fraudulent opening of accounts without customers’ knowledge. In fact, the former CEO of Wells Fargo, John Stumpf, was recently called to testify in front of Congress to defend his and his company’s conduct. This conduct included opening 1,534,280 unauthorized deposit accounts, submitting 565,443 unauthorized credit card applications, opening unauthorized lines of credits, and various other fraudulent actions all without the customers knowledge.
Impossibly High Sales Goals Standards Leads to Fraud at Wells Fargo.
So why did Wells Fargo open all of these accounts? Profit. By pressuring Wells Fargo employees into meeting impossibly high sales quotas, employees resorted to fraud to meet said goals. Unfortunately, it worked all too well. These impossibly high sales quotas generated millions of dollars for the company, and in some cases employees were given bonuses for reaching their goals through fraud.
So far, more than 5,000 employees have been terminated, and while Wells Fargo takes the position that this was not a managerial initiative, some employees disagree. One former employee told Forbes “‘[w]hat I want people to understand, it was more survival . . . To say we were under pressure is an understatement.’”
Where Was The Whistleblower?
The $185 million payment to the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency, and the Los Angeles City Attorney was not the result of any whistleblower program, nor does any office have a whistleblower program. However, a whistleblower could have been rewarded millions for reporting this fraud to the SEC.
By engaging in illegal sales practices, Wells Fargo may have committed Securities Fraud by misleading investors. Wells Fargo is a publicly traded company, meaning the SEC has jurisdiction to prosecute and reward an anonymous whistleblower for reporting such fraud. A whistleblower who reports corporate fraud to the SEC can stay anonymous as long as they report the fraud through an attorney. This would have allowed any of the thousands of Wells Fargo employees to report this fraud to the SEC and receive up to 30% of what the SEC recovers from Wells Fargo. Further, the SEC Whistleblower Program protects whistleblowers from retaliation by their employers. While the SEC is investigating the fraud, it is not believed to be a result of a whistleblower disclosure.
If you have knowledge that a public corporation is engaging in Securities Fraud or other fraudulent activities, then give us a call today for a free consultation and case review with an experienced whistleblower attorney.