The scandal involved the company pressuring employees to open fraudulent accounts in the name of existing customers, breaking the law in doing so. But the results made the bank's claims of successful cross-selling of products look better, contributing to the stock's performance and, not incidentally, to the personal income and wealth of bank executives heavily compensated with stock options.
What struck me especially in this account was the story shared by a former employee. Part of what the Senators are investigating is whether the bank put negative information about employees who objected to the fraud in a federal filing called the U5 form:
Some former workers say that Wells Fargo used the filings as a blunt instrument, with little regard for the damage that inaccurate or imprecise allegations could inflict on people’s careers.Jerskey's is obviously not a new story. Nor will it be the last of its kind.
Ivan Jerskey, who was fired by Wells Fargo in September, is fighting the bank about its filing on his departure.
Mr. Jerskey was a financial adviser in Marin County, Calif., for high-net-worth clients. He was fired, he said, for errors related to the creation of a new account for an older client whose two daughters had trustee powers over his finances.
Mr. Jerskey opened the account after obtaining only the primary client’s signature, in violation of a bank policy — one that employees were actively told to overlook, he said — requiring the signatures of all three trustees. Mr. Jerskey also checked off a box on an account form saying that he had met all three trustees “face to face,” even though he had not.
“It never occurred to me that I was doing this incorrectly,” he said. “It was completely common practice, not just with me but with everybody at the branch. That’s how we were told to do it by several managers and departments.”
Wells Fargo filed a U5 saying that Mr. Jerskey had opened the account “in violation of firm policies,” which may be technically true, Mr. Jerskey said, but it omits the fact that he was doing as his bosses instructed.
He is concerned that in Wells Fargo’s effort to clean house, people like him have become collateral damage. The negative entry in his file has complicated his search for a new job.
“It’s almost slander,” he said. “It’s extremely difficult to remove these kinds of records, and it sets off alarms. I think they’re just trying to make examples out of people.”
Individual employees being pressure to break the law are in a tough spot. As this article reminds us, a company willing to break the law is willing to break the law to cover it up. Including smearing employees in a way that may make it difficult for them to get jobs in their field in the future.
But Jerskey's story as recorded in the Times report is a reminder of what can happen when the employee goes along with it. You're still stuck with the fact that you violated the law.
Convincing yourself that "everybody does it" or "only losers get caught" is a reckless way to think about it.
Michael Phillips' excellent 1974 book The Seven Laws of Money uses as its third law "Money Is A Dream," followed by the fourth, "Money Is A Nightmare." He explains of the latter:
Money is a very significant reason for people being in jail. Maybe one way of stating it is that their aspiration for money and their ability to accumulate it are radically different. People who commit a crime often reach a state where they want money so badly that they are willing to take a higher risk than most other people are. In my opinion, a person who gets caught stealing money from a bank or a grocery store is a person who has a fantasy about what money can do for him. I find it hard to understand how someone can hold up a bank or a grocery store simply because he is hungry. ... Many people in the world live at a subsistence level that is only a fraction of that which most Americans in jail have ever lived at. Again, it is hard to believe that what a con considers to be a "subsistence level" is worth stealing to maintain, or that his need to steal in order to maintain it is in any way related to reality. Money is clearly a nightmare for those who are in jail as a result of money-related problems.Very practical advice wrapped in a Zen package.