Wacky, probably some fraudulent, sales tactics were pervasive at Wells Fargo. When you have to fire 5,300 employees in one fell swoop, you have a culture problem. Yet, following a high-falutin’ law firm independent investigation, and that report, to Well’s Fargo’s credit, has been released, the discussion of retaliation is found in Footnote 26 on p. 87 (of 110 pages). https://www08.wellsfargomedia.com/assets/pdf/about/investor-relations/presentations/2017/board-report.pdf. Read it and wonder:
Based on a limited review completed to date, Shearman & Sterling has not identified a pattern of retaliation against Community Bank employees who complained about sales pressure or practices. The review, which is ongoing, thus far has consisted of the following five steps. First, Wells Fargo’s outside counsel provided a spreadsheet listing 115 potential whistleblower cases identified by Wells Fargo’s HR legal team for the period 201116 (this included many different types of claims, e.g., sexual harassment). From that spreadsheet, ten case files (including legal documents, employee files, HR records, ICE records and case-related correspondence) from the period 2011-2013 were identified for review because the spreadsheet description suggested those cases could be related to sales practice misconduct. The review of those ten files did not reveal any documentary evidence suggesting purposeful retaliation in those cases. Second, based on a review of these ten case files, media reports, the Shearman & Sterling document repository and a list provided by Wells Fargo’s legal department of publicly-disclosed whistleblowers, counsel identified 11 former Wells Fargo employees to interview (only three of whom agreed to speak). Counsel also reviewed documents relevant to those 11 individuals located in Shearman & Sterling’s document repository. This inquiry did not identify evidence of retaliation. Third, Shearman & Sterling analyzed whistleblower and EthicsLine reports made to the A&E Committee going back to 2011, and identified nine incident descriptions as potentially implicating sales practice-related retaliation. Two of those incidents related to employees whose files were reviewed as part of the review described in the first step, above, and review of the other seven files has not been completed as of the date of this Report. Fourth, Wells Fargo’s outside employment counsel reviewed files (including ICE records, EthicsLine data, HR data and media reports) relating to 885 employees, consisting of employees who (i) called Wells Fargo’s EthicsLine between January 1, 2011 and October 5, 2016, identified themselves on the calls and were subject to a corrective action within 12 months of their call or (ii) during the month following the September 8, 2016 settlement announcement, claimed in media reports that Wells Fargo had retaliated against them for reporting sales misconduct or sales practices concerns. Shearman & Sterling is in the process of independently reviewing the following two sets of files reviewed by Wells Fargo’s outside employment counsel, in each case as supplemented by a search for relevant documents in its own document repository: (i) eight files identified by Wells Fargo’s employment counsel as raising “concerns,” and (ii) ten additional files of employees who were also among the 5,367 terminations referenced in the September 2016 settlements. Fifth, whistleblowers have been identified in the derivative complaints relating to sales practices filed by Wells Fargo shareholders. Shearman & Sterling determined that one of those did not involve a sales practice-related matter, and has reviewed the files related to two other publicly-identified whistleblowers as part of the review described in the first step above. Counsel is still in the process of reviewing the files relating to an additional four individuals.
Some advice for the Wells board of directors (who got by with a squeak at last week’s annual meeting):
1. Wells has a culture problem. It has an internal audit problem. It has a problem with to whistle-blower reports. It has a problem with what to do in a crisis of this magnitude. Quit running ads and commissioning investigations. See below.
2. Law firms do not investigate culture — they are looking for violations of the law. And it shows.
3. People generally do not create retaliation documentation. Stunningly, the law firm seems surprised to write, “We could not find a stitch of evidence.” Watch out, Holmes and Watson.
4. Most employees will not take a complaint through to action. Stunningly, again, internal audit did not follow up with the complaints to see what was what. Internal audit did not even catch the patterns on fake accounts. Talk to the people who left voluntarily. The Barometer’s son is one — he has a letter that he sent to headquarters explaining why he was resigning in 2012 from a Wells branch. Most informative.
5. Current employees at are not candid with a law firm. Investigations make most people nervous, particularly when they have witnessed colleagues dropping like flies — voluntarily or otherwise. And Wells has not indicated that it understands the issues. It is trying to survive a criminal investigation and it shows.
6. Read The Seven Signs of Ethical Collapse. It can help you understand the culture of fear and silence. Until you get that part of this crisis, you have relegated the real issues to footnotes.