·  Legal News, Analysis, & Commentary


Wave of Backlash Against Wells Fargo Swells

— September 26, 2016

After a Senate hearing held Tuesday, September 20, 2016, regarding the illegal creation of millions’ of fraudulent accounts by corporate giant Wells Fargo, it has been reported two of the bank’s former employees have filed a class action lawsuit in California in which they are seeking more than $2.6 billion in damages for employees who they allege were forced to meet impracticable sales goals or face disciplinary action, demotion or termination. The suit is intended to represent current and former Wells Fargo employees over the past ten years who were reprimanded for not meeting sales goals despite having never violated company policy or the law. This new setback for the beleaguered bank is just one of many since the public revelation of the bank’s unethical and unlawful practices over the course of at least the last five years, which has already resulted in a $185 million fine. The suit, filed on Thursday of last week in the California Superior Court in Los Angeles, alleges, “Wells Fargo fired or demoted employees who failed to meet unrealistic quotas while at the same time providing promotions to employees who met these quotas by opening fraudulent accounts.” Alexander Polonsky and Brian Zaghi, the two men who filed the lawsuit, claim they were among the 5,300 employees who were fired, though they say they were wrongfully terminated simply because they were unable to reach their expected sales quotas of 10 accounts per day to eventually ensure eight accounts per client household. They also stated they were constantly monitored by district managers who allegedly discussed employee expectations up to four times per day, saying workers were encouraged to do “whatever it takes” to reach the impossible goals set forth by the company.

The suit also alleges the higher-ups were well aware of the scam, claiming “Wells Fargo knew that their unreasonable quotas were driving these unethical behaviors that were used to fraudulently increase their stock price and benefit the CEO at the expense of the low level employees. Wells Fargo could then place the blame on thousands of $12 an hour employees who were just trying to meet cross-sell quotas that made the CEO rich.” The bank’s Chief Executive Officer, John Strumpf, earns approximately $19.3 million per year, which includes a base salary, stock in the company, cash bonuses and other miscellaneous compensation. Meanwhile, the “lower level” members of his staff who did not engage in any fraudulent behavior have reported suffering from shame, humiliation, lost wages and benefits, and high levels of anxiety.

Wells Fargo CEO John Strumpf; image courtesy of Thomas Broening via
Wells Fargo CEO John Strumpf; image courtesy of Thomas Broening via

During the Senate Banking Committee hearing, Senator Elizabeth Warren, who has long supported holding big banks and corporations accountable for their revolting actions against average citizens, slammed Strumpf by reminding him of the millions of dollars he knowingly and willingly made off the scam, despite the harm it caused to the clients affected by it and the employees who had little choice but to engage in it. While looking him in the eye, Warren said, “You should resign … and you should be criminally investigated.” I can’t help but agree with her. Several other Senators had questions they wanted answers to, including whether or not Strumpf truly believes this is a case of fraud; if the bank plans to reclaim any portion of the millions already paid to Carrie Tolstedt, a former executive who is set to retire with a payout of $125 million; and how the bank plans to help those whose credit scores were negatively impacted. Not surprisingly, Strumpf claimed he couldn’t quite answer the questions because, as he said more than once, he is not “a lawyer, a compensation expert or a credit consultant.” Seems a rather convenient excuse given he was able to pull off one of the most disturbing cons in recent history for so long before being exposed for the vulture he truly is.

Wells Fargo has declined to comment on the class action suit thus far and it would not surprise me if they never do. I would be more surprised if justice actually prevails for the people who suffered irreparable harm instead of another big business remaining above the law complaining about how bad that slap hurt their Vacheron Constatin Tour de I’lle-covered wrist.

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