Professor Elam

Thursday Nov 3, 2016

We have regularly updated the worsening ethical situation at Wells Fargo. Now we learn that

WFC is being investigated by the SEC.

Or as Ed McMahon used to say to Johnny Carson, how bad is it?

The fake account mess, combined with ongoing scrutiny of Wells Fargo's mortgage tactics, has forced the bank to ramp up its legal defense fund. Walls Fargo warned investors that in a worst-case scenario, its litigation losses could be $1.7 billion "in excess of" what it's already set aside. That's up from an estimate of $1 billion as of August.

The article goes on to say that the results may be 'material ' to WFC overall operation. This means one would change one's mind if one knew of the changes.

One can learn a great deal about how accounting works by reading such articles. I am currently working on a business case study for this case. At first I was going to tackle it from the governance and ethics side. But that will no doubt be done by many. Then I realized the real story revolves on how WFC ignored a socionomic approach to the problem   CEO Stumpf walked into the Senate meeting totally unprepared for the tsunami of negative opinion that awaited him. As far as I know this will be the first business case study to demonstrate just how dangerous it is to ignore unconscious social mood. We look forward to sharing the results with you. Hopefully it will be off to a publisher within a month.