Task 3

C206

Western Governors University

 Wells Fargo Code of Ethics 1

Wells Fargo Code of Ethics

I selected Wells Fargo's Code of Ethics because of its significant business influence both

at a domestic and internal level. As one of the leading global banks, I chose this company and its

Code of Ethics to analyze how a major financial institution follows its Code of Ethics worldwide.

Company's Code of Ethics Towards Corporate Social Responsibility

As a large company that significantly influences society's finances, Wells Fargo must

provide more information for the community and culture, particularly regarding Corporate Social

Responsibility. Wells Fargo does state as part of its vision that "we want to satisfy our customers'

financial needs and help them succeed financially." They also illustrate their Goals to be

financial leaders in corporate citizenship. However, the twenty-one-page Code of Ethics focuses

mainly on the expected conduct from their employees, with a limited section on customers and

very little information related to supporting communities.

The company does articulate under the Code of Ethics to "be known as a trusted neighbor

in the communities where we live and operate." However, there needs to be more information

addressing ways the bank and its team members can be involved in supporting their

communities. Their Code of Ethics may need to address how they intend to support communities

and how they can be financial leaders in addressing society's economic challenges. This quality

may include setting aside volunteer time for employees (as opposed to limitations stated in their

Code), financial literacy workshops in schools or non-profit organizations, grants to foster

economic development, humanitarian initiatives, and other programs that involve the bank

fulfilling its corporate social responsibility towards its local and global communities.
 Wells Fargo Code of Ethics 2

Compliance with Legal Mandates

Wells Fargo does an outstanding job covering topics of compliance with legal mandates.

They explain with clarity and detail "to following all applicable laws, rules, and regulations that

apply to our businesses," such as Anti-Bribery and Anti-Corruption laws that must be met

according to their policies. This legislation includes laws not only in the U.S. but also laws in

"all jurisdictions in which we operate." They further emphasize the importance of complying

with anti-competitive, anti-tying, insider trading, sanctions, and anti-boycott laws. Furthermore,

the bank has multiple parties to deal with ethical matters, such as the direct manager, employee

relations, human resources professional, ethics oversight committee, and board audit and

examination committee.

The company clearly states that the employees are representatives of Wells Fargo. Their

statements rely on the honesty and integrity of its employees. The bank itself is aware that it

could be held criminally liable if one of its employees or agents violates the Code of Ethics,

including committing a crime, breaking the law or policy, and dishonest acts regarding money

mishandling or recording. Wells Fargo could face legal lawsuits and fines if found guilty of

noncompliance with legal mandates. Employees can also face loss of employment and potential

legal action if found non-compliant with serious legal orders.

Wells Fargo has two ethical safeguards to prevent illegal and unethical acts: the "Let's

talk ethics – Making the right choices" section and the non-retaliation policy for employees to

report issues openly. Wells Fargo does an outstanding job of providing five essential questions

for the employees to help them prevent illegal and unethical acts. The questions are:
 Wells Fargo Code of Ethics 3

1. Does it comply with the spirit or intent of any applicable law, rule, regulation, or

regulatory expectation?

2. Does it comply with our policies?

3. Is it consistent with our values?

4. Is it compatible with our long-term goals and interests?

5. Would I be comfortable with my decisions if it's made public?

If the answer is no to any of the five questions, the person should not do it. The non-

retaliation policy safeguards employees acting in good faith who might otherwise feel

threatened, afraid, harassed, or even fearful of losing their jobs by reporting possible misconduct,

unethical actions, or violating security and legal laws.

Development of an Ethical Culture

Wells Fargo maintains their culture of ensuring everyone is "committed to the highest

standards of integrity, transparency, and principled performance." The Bank's Code of Ethics

goes to great length, tying it with its five values of what's suitable for customers, people as

competitive advantage, ethics, diversity and inclusion, and leadership. Moreover, the company

gives specific details for employees to act ethically. This situation includes keeping confidential

information safe and secure, maintaining accurate records, conflicts of interest, gifts, business

expenses, and dealing with customers. These specific and carefully selected areas are covered in

great length and detail so the company can continue to provide an environment conducive to

growth, honesty, and integrity.

Wells Fargo Employee Ethical Concern

 Wells Fargo Code of Ethics 4

Wells Fargo employees have a moral obligation to promptly report any knowledge or

information regarding the misconduct, violation, or dishonest act by another employee, third

party, customer, or co-worker. Various parties (depending on the nature of the breach) will then

review and resolve the issues. Employees may raise or report ethical concerns via the 1-800-382-

7250 "ethics line" or submit a report online through the Wells Fargo Ethicsline web reporting.

Non-US-based employees can also register by calling using international numbers and access

codes. Employees can access three resources: the Ethics Line, their direct manager, and the

Audit and Examination Committee.

The Ethicsline serves as the primary internal resource for Wells Fargo Employees.

Suppose employees have code questions, concerns, complaints, or possible violations. In that

case, the ethics line can document and provide an independent evaluation of the matter and

implement steps to prevent and rectify the issue. Managers serve as another internal resource

within the employee's reporting line. Suppose the employee feels comfortable with the manager.

In that case, the manager should be able to provide guidance, counsel, and assistance to

employees, especially with sensitive matters such as sexual harassment, discrimination,

workplace complaints, and violations of the Code of Ethics.

A third source is the Audit and Examination Committee of the Board. This line deals with

issues and concerns regarding accounting, internal accounting controls, and other auditing

matters that may misrepresent Wells Fargo's financial assets and statements.

The resource I would use depends on the matter at hand. If the issue involves my current

manager, I would report it to the ethics line. I would seek my manager if I'm dealing with an

ethical dilemma relating to a customer or co-worker. I would seek the Audit and Examination
 Wells Fargo Code of Ethics 5

Committee Board if the moral matter concerns accounting and financial auditing. Either way, for

all three examples, I would submit an online report through the Ethicsline online reporting

system to safeguard and document all my actions.

Policy to Address Unethical Conduct

Personal and Organizational Factors

Employees must consider several personal and organizational factors as a last resort

before blowing the whistle for unethical conduct at work.

Personal factors include topics such as:

● Have I gathered all the necessary information before I blow the whistle?

● Does the issue at hand strongly affect my values?

● Am I doing this for the betterment of society or personal gain?

● Am I willing and prepared to face the slandering of my good name and

reputation? Am I willing to undergo intense scrutiny?

● Am I willing to have my family or close friends potentially be ridiculed,

ostracized, or shunned in their respective schools, work, and community?

● Can I invest time and money in this issue?

● Is it worth undergoing added stress to my physical and emotional health?

 Wells Fargo Code of Ethics 6

Organizational factors that an employee would need to consider are:

● Have I documented all my actions and responses?

● Have I addressed the legal, human resource, financial, or business matters to the

appropriate department in the company?

● If the issue is unresolved after the appropriate channels, do I have all my facts and

information ready to send to the CEO or Senior Executive Management?

● Have I exhausted all my internal resources provided at the company?

● Am I willing to go outside the company, such as a government regulatory agency

or the press?

After gathering all the correct facts and data, these are examples of personal and organizational

factors the whistleblower must consider.

Internal and External Reporting Steps

If an employee decides to blow the whistle, the employee could follow the following

internal and external steps:

Internal

1. Document all action items such as conversations, phone calls, emails, and other pertinent

information for protection and safeguarding. Please make sure to keep challenging and

electronic copies.
 Wells Fargo Code of Ethics 7

2. Exhaust all internal resources such as the manager, human resources, ethics officer, and

legal department regarding the violation and disregard to the Code of Ethics.

3. Prepare a written complaint and send it to senior management along with any evidence to

support your claim if the actions by previous levels were non-satisfactory.

External

1. If no action was taken by senior management, then consult an attorney and seek legal

advice on what legal action should take place and what legal protection is available.

2. Prepare family and friends on the decision to whistle blow.

3. Contact the appropriate government or regulatory agency to handle the ethical issue. Be

prepared to speak with the press if the problem is of grave concern.

4. Be prepared to leave the company and pursue another opportunity.

Advantages and Disadvantages for Whistleblowers

False Claims Act

The False Claims Act is a Federal Law that awards 15-30% of recovered damages to

whistleblowers who report business wrongdoings defrauding the government and their programs.

(Trevino & Nelson, 2017). One advantage for a whistleblower to receive payment from the

government under the False Claims Act is that the whistleblower will receive compensation and

be viewed as a hero for revealing the truth and stopping wrongdoing. If millions or billions of

dollars are being defrauded, a 15-30% award from recovered funds is a small price to pay. The

whistleblower would most likely lose their employment with the company; thus, this award
 Wells Fargo Code of Ethics 8

would help them and their families have some financial security as the whistleblower seeks a

new opportunity.

The disadvantage for a whistleblower to receive payment from the government would be

that they might provide false claims in their report to receive a significant financial gain. The

whistleblower might become tempted to cleverly tamper, deceive, and exaggerate their lawsuits

to put the company out of business and receive the most financial compensation possible. This

action can cause a Domino effect where more whistleblowers can be increased solely for

financial gain.

U.S. Sentencing Guidelines Impacting Business Operations

The U.S. Sentencing Guidelines provide a standard for companies to improve their

ethical culture and behavior and increase their awareness and compliance with the law. These

guidelines are a policy in determining the sentencing given to a corporation convicted of severe

crimes. They have changed how organizations operate by ensuring steps to mitigate compliance,

and ethical, and legal risks. The guidelines have prodded companies to be more self-aware of

serious crimes and help put practices in place so all employees can follow suit and comply with

the law. An organization with a strong ethics program will have a lesser culpability score, while

organizations without will face harsher consequences if found guilty of a felony. The U.S.

sentencing guidelines impact business operations in how they conduct business, comply with the

law, and promote ethical solid culture among their stakeholders.

Three Culpability Factors

 Wells Fargo Code of Ethics 9

Three culpability factors used to determine fines under U.S. Sentencing Guidelines are

the business size and degree of participation, prior history, and an effective program to prevent

violations (Trevino & Nelson, 2017). The first two aggravating factors increase the culpability

score and fines; meanwhile, the final third factor is a mitigating factor that will decrease the

culpability score and penalties.

The business's size and participation degree are investigated and determined. This factor

includes the level of activity, knowledge, and intentional involvement the individual or company

had with the violation. Who conducted the breach, and at what level/authority do they stand

within the company? Does it involve a small, medium, or large company within its respective

industry? The greater the company's size with heavy participation, the greater the fine. The

smaller the company and the lower the level of involvement, the more minor the penalty.

Prior history investigates what actions the company has done before. Is this the first time

the company has been involved with this misconduct? Does the company have an account with

repeated similar offenses? What actions has the company taken to rectify its disregard for the

law? If the company continues to disregard the law with repeated violations, the fines will be

heavier, and the company could run out of business and declare bankruptcy. The culpability

score and penalties will be less if the company has no prior history.

Effective programs to prevent violations and disregard the Code of Ethics are mitigating

factors for the company to reduce its culpability score. This element includes determining if the

company has a program in place. Does the program include steps to mitigate compliance and

operations risks? What measures are taken to address violations? Overall, how effective is the

program? If the company does not have a sound, practical program, it will see no reduced
 Wells Fargo Code of Ethics 10

culpability score. If the company has an effective program, it will see a reduction in both the

culpability score and fines.

References

Trevino, L. K., Nelson, K. A. (2017). Managing Business Ethics: Straight Talk about How to Do

It Right. [Western Governors University]. Retrieved September 14, 2023, from

[Link]

Maxwell, J. C. (1999). The 21 indispensable qualities of a leader: Becoming the person that

people will want to follow. Nashville, TN: T. Nelson.

Wells Fargo. (n.d.). Our Code of Ethics and Business Conduct. Retrieved September 14, 2023,

from [Link]