II.

IMPLEMENTATION PLAN

Parties Mitigation
Phase Activity Priority Challenges
Involved Strategies
Enterprise Risk
Centralization:
Established
Centralize ERM, Board Risk Fragmented
Phase 1: clear reporting
compliance, Committee, oversight;
Centralization of lines; board
internal audit, and Chief Risk resistance
Risk mandate for
HR investigations High Officer, from business
Management independence;
under the Chief Compliance, units; delayed
and Control protect control
Risk Officer with Internal escalation of
Functions functions from
direct reporting to Audit, HR risks
retaliation
the Board Risk
Committee.
Enterprise-Level
Risk Indicators:
Aggregate
Standardized
standardized risk
Incomplete metrics;
indicators CRO, Risk
data; integrate
(account closures, Management,
High inconsistent enterprise
complaints, Board Risk
metrics across dashboards;
turnover, Committee
units require regular
whistleblower
board reviews
reports) for
regular board
review.
Elimination of
Clear board
Phase 2: Sales Quotas: Board Cultural
derivatives;
Redesign of Permanently Compensation resistance;
phased
Incentives and remove product- High Committee, short-term
transition;
Performance based sales HR, Senior revenue
communicate
Management targets and cross- Management pressure
long-term value
selling metrics.
Ethics-Based
Performance
Evaluation: Define objective
HR, Measurement
Shifts evaluations non-financial
Compliance, difficulty;
to customer High KPIs; audit
Business Unit inconsistent
satisfaction, performance
Heads application
compliance, reviews
ethical conduct,
and sustainability.
Benchmark
Compensation Board Talent
High compensation;
Restructuring: Compensation retention
transparent
 Increase fixed Committee, concerns; cost communication;
pay; limit HR adjustments retention
variable pay tied planning
to non-financial
indicators.
Board
Restructuring:
Increase
Global search;
Phase 3: proportion of Limited
clear
Strengthening independent Board qualified
independence
Board directors with High Nominating candidates;
criteria;
Oversight and expertise in Committee independent
staggered
Information regulation, ethics, concerns
appointments
Integrity consumer
protection, and
ERM.
Direct Reporting
to Board
Committees: Audit
Formal
Institutionalize Committee,
reporting
direct reporting Risk Management
protocols;
from audit, Medium Committee, filtering of
executive
compliance, and Internal information
sessions without
whistleblower Audit,
management
programs to Compliance
Board Risk and
Audit Committe
Whistle
Protection
Phase 4:
Enhancement: Enforce anti-
Institutionalizin
Ensure retaliation
g Ethical Board, Fear of
anonymity, policies;
Leadership and High Compliance, retaliation;
prohibit independent
HR low trust
retaliation, and hotline
Speak-Up
link managerial oversight
Culture
evaluations to
ethical leadership.
Continuous
Mandatory
Ethics Training: Engagement
HR, External training;
Implement role- fatigue;
Medium Training flexible
specific, ongoing resource
Providers delivery;
ethics education constraints
across all levels. budget
allocation
Executive Clear
Board, Senior Ambiguous
Accountability for High accountability
Executives accountability
Culture: metrics;
 Hold senior leaders consequences tied
personally to evaluations
accountable for
ethical outcomes.
Independent
Reviews and
Reporting: Streamline
Board, Compliance
Conduct periodic reporting;
Monitoring & External burden;
independent High scheduled
Evaluation Evaluators, reporting
reviews and report independent
Regulators fatigue
progress to assessments
regulators and
stakeholders.

XII. CONCLUSION

The Wells Fargo scandal illustrates how ethical failures in large financial
institutions are rarely the result of isolated employee misconduct, but
instead emerge from systemic weaknesses in governance, risk management,
and organizational culture. Despite its long- standing reputation for stability
and trustworthiness, Wells Fargo’s aggressive cross-selling strategy, combined
with misaligned incentives and weak oversight, created an environment in
which unethical behaviour became normalized. The prolonged creation of
unauthorized customer accounts demonstrated how excessive performance
pressure, when unchecked by effective controls, can undermine even the
most established institutions.

This case study highlights the critical role of leadership and board oversight in
preventing organizational misconduct. Senior management’s endorsement of
unrealistic sales targets and the board’s reliance on management-filtered
information allowed early warning signs to go unaddressed for years. Risk
management and internal control functions lacked sufficient independence and
authority, resulting in fragmented accountability and delayed corrective action.
These failures ultimately led to severe regulatory penalties, reputational
damage, leadership turnover, and long-term operational constraints, including
the unprecedented Federal Reserve asset cap.

The Wells Fargo case also underscores the importance of ethical culture and
psychological safety within organizations. Front-line employees were placed
in coercive environments where ethical behaviour conflicted with job
security, while whistle-blowers were discouraged or punished. This
breakdown in ethical leadership demonstrates that formal compliance
mechanisms are insufficient without a genuine commitment to integrity and
transparency at all levels of the organization.
Ultimately, the lessons from Wells Fargo extend beyond a single institution. The
case serves as a cautionary example for corporations worldwide,
emphasizing that sustainable
performance depends on strong governance structures, centralized and
independent risk management, ethical incentive systems, and accountable
leadership. Organizations that prioritize short-term financial metrics over
customer trust and ethical responsibility risk long-term value destruction. By
embedding transparency, accountability, and ethical leadership into their
governance frameworks, firms can better protect stakeholders, restore trust, and
reduce the likelihood of similar failures in the future.

XIII. REFERENCES

Consumer Financial Protection Bureau. (2016). Consumer Financial Protection

Bureau fines Wells Fargo $100 million for widespread illegal practice of
secretly opening unauthorized accounts. [Link]

Corkery, M., C Cowley, S. (2016, September 8). Wells Fargo fined $185 million
for opening accounts without customers’ consent. The New York Times.
[Link]

Federal Reserve Board. (2018). Federal Reserve Board announces

enforcement action against Wells Fargo. [Link]

Federal Reserve Board. (2025). Federal Reserve announces termination of

enforcement actions against Wells Fargo. [Link]

Gartenberg, C., Prat, A., C Serafeim, G. (2023). Corporate purpose and

financial performance. Organization Science, 34(1), 1–25.
[Link]

Goyal, R., C Kumar, V. (2024). Incentive structures, ethical risk, and misconduct
in financial institutions. Journal of Business Ethics, 190(2), 345–362.
[Link] 023-05412-8

Independent Directors of the Board of Wells Fargo C Company. (2017). Sales

practices investigation report. Wells Fargo C Company.

Kedia, S., Rajgopal, S., C Zhou, X. (2023). Did governance reforms improve
bank behavior after major scandals? Journal of Financial Economics, 148(3),
620–642. [Link]

Organisation for Economic Co-operation and Development. (2023). Corporate

governance and business integrity: A global perspective. [Link]
Treviño, L. K., den Nieuwenboer, N. A., C Kish-Gephart, J. J. (2024). Unethical
behavior in organizations. Annual Review of Psychology, 75, 635–660.
[Link] psych-032420-033418

U.S. Government Accountability Office. (2024). Bank regulatory oversight

and consumer protection reforms. [Link]

U.S. Senate Committee on Banking, Housing, and Urban Affairs. (2016).

Examining Wells Fargo’s unauthorized accounts and the regulatory response.
U.S. Government Publishing Office.

Wells Fargo C Company. (2022). Company history. [Link]

Wells Fargo C Company. (2024). Corporate governance and risk

management report. [Link]