5,300 Employees Were Terminated. The Pattern Was Still There.
Decisions Under the Microscope: What an SEC proceeding against Wells Fargo reveals about holding people accountable—and recognizing when the problem is bigger than the people involved.
Imagine being a bank teller or personal banker and knowing that your performance isn't judged only by how well you serve customers.
You're also expected to sell.
Checking accounts. Savings accounts. Credit cards. Other financial products.
And the sales goals keep climbing.
Employees at Wells Fargo's Community Bank—the company's massive consumer-facing retail banking operation—worked inside a sales culture where meeting those goals was a significant measure of performance.
As the goals became increasingly difficult to achieve, the pressure intensified.
Managers pushed employees to hit their numbers. Employees understood that missing sales goals could mean poor performance evaluations, disciplinary action, or even termination. Wells Fargo's later independent investigation found that some managers explicitly directed or implicitly encouraged employees to engage in unlawful or unethical practices to meet those expectations. The investigation found evidence of employees struggling to meet sales goals ethically as early as 2002. The problem became substantially worse beginning around 2010, as sales plans increasingly diverged from actual market opportunity and pressure grew to sell products customers had not requested, did not need, or would not use.
With that pressure came the conduct that would eventually make national headlines.
Employees opened deposit accounts customers had not authorized.
They submitted credit-card applications without customers' knowledge or consent.
Customers were enrolled in online banking services they had not requested.
Debit cards were ordered and activated without authorization. (Consumer Financial Protection Bureau)
That distinction matters.
This wasn't simply aggressive selling or convincing someone to buy something they didn't really need.
In many instances, the customer never requested or agreed to the product at all.
The CFPB concluded that these practices violated federal consumer financial law. (Consumer Financial Protection Bureau)
And Wells Fargo was taking action against employees.
Between 2011 and 2016, more than 23,000 employees were referred for sales-practices investigations, and more than 5,300 were terminated for customer-facing sales ethics violations. Thousands more were disciplined or resigned before their investigations were complete. (SEC)
And still, the problem was bigger than the people being removed.
That's the part of this case I want to examine.
Not whether employees who engaged in misconduct should have been held accountable.
They should have been.
The more consequential question is for leadership is:
At what point should the sheer repetition of the behavior have changed the diagnosis?
Because if thousands of people are being investigated, disciplined, and terminated for versions of the same behavior—and the behavior continues—leadership has more than an employee misconduct problem to understand.
It has a pattern.
What Wells Fargo was actually dealing with
The Community Bank wasn't a small community bank or separate institution. It was Wells Fargo's largest business unit and its consumer-facing retail banking operation—the part of the company serving customers through branches and other channels. (SEC)
And sales were deeply embedded in how that business operated. Wells Fargo publicly emphasized “cross-selling”—selling additional financial products to existing customers—as a key part of the Community Bank's success. But the SEC later found that the business had implemented a volume-based sales model in which employees were pressured to sell large numbers of products, sometimes with little regard for whether customers actually needed or would use them. (SEC)
That's an important distinction.
This wasn't simply:
Sell more.
For many employees, sales expectations were connected to how their performance was evaluated and to potential consequences for failing to meet expectations. And as the goals became harder to reach, the pressure did not necessarily adjust to what the market could reasonably support.
The pressure increased.
That's where this becomes an organizational case study rather than simply a misconduct story.
Employees still made choices. Customers still experienced harm. Individual accountability still mattered. But if the same behavior keeps appearing across thousands of employees operating under similar conditions, leadership has to ask whether removing the individuals is enough.
When the same answer stops being enough
Earlier this week, I wrote about five questions I ask when a people problem keeps happening.
Wells Fargo gives us an unusually well-documented opportunity to see what happens when we apply them.
Have we seen this before?
Yes.
And not just a few times.
There was evidence of employees struggling to meet sales expectations ethically years before the scandal became public. By 2011–2016, tens of thousands of employees would become the subjects of sales-practice allegations.
More than 23,000 were referred for investigation.
More than 5,300 were terminated.
At that scale, asking “What did this employee do?” is still necessary.
It just isn't sufficient.
Leadership also has to ask:
Why are so many employees doing versions of the same thing?
2. Where was it concentrated?
Substantially within the Community Bank.
That matters because patterns often become visible through concentration. One resignation may tell you very little. Five resignations from one team tell you where to look.
One complaint about a manager requires investigation. Multiple independent complaints describing similar behavior give you something else to examine.
And thousands of sales-practice investigations arising from one major business operation should cause leadership to examine not only the people involved, but the environment in which they are operating.
That's eventually what Wells Fargo's independent directors did. Their investigation was designed to examine the root causes of the sales-practice abuses, including how corporate structure, culture, and individual actions contributed to what happened. It examined the Community Bank as well as senior management, Human Resources, risk, legal, audit, and board oversight.
They weren't only asking: Who did something wrong?
They were asking: How did this happen?
3. What conditions kept appearing?
Now the picture becomes much clearer.
Aggressive sales goals. Intense management pressure. Performance consequences tied to meeting expectations. Incentive compensation. Pressure to sell products customers had not requested, did not need, or would not use. A decentralized organizational structure. Control functions that did not adequately connect and escalate what was happening across the business.
None of those conditions proves that an individual employee would commit misconduct.
That's important.
Conditions are not excuses.
They're part of the diagnosis. Because when similar conduct repeatedly occurs under similar conditions, leaders need to understand both.
What did the person choose?
And what was the organization repeatedly asking, rewarding, pressuring, permitting, or failing to see?
4. What response was repeated?
Investigation.
Discipline.
Termination.
Again.
And again.
More than 5,300 terminations demonstrate something important:
The bank was responding.
That's what makes this case more useful to me than a simple story about an organization ignoring misconduct.
People were investigated.
People were disciplined.
People lost their jobs.
Cases were being handled.
But handling cases and interrupting a pattern are not necessarily the same thing.
An organization can ask:
Did we investigate? Yes.
Did we document it? Yes.
Did we hold someone accountable? Yes.
Did we terminate when warranted? Yes.
And still need to ask:
Did what we did change what kept happening?
5. Did the response change the outcome?
Not sufficiently.
And that's the hinge.
The repeated investigations, discipline, and terminations addressed individual behavior.
They did not, by themselves, resolve what Wells Fargo's independent directors would later identify in the culture, system, leadership, organizational structure, and oversight.
Eventually, the interventions got wider. Wells Fargo eliminated product sales goals, changed how retail bankers were compensated, changed Community Bank leadership, and strengthened ethics, risk management, controls, and oversight. (SEC)
Notice what happened.
The intervention moved beyond the people committing the misconduct to the leadership and systems surrounding the misconduct. That doesn't make the earlier individual accountability inappropriate. It means individual accountability was not the entire intervention the organization needed. A response can be appropriate and still be insufficient.
And if the same problem survives the people you've coached, disciplined, transferred, or terminated, that does not automatically prove the problem is systemic. But it should change the question.
From: Who did this?
To: What keeps making this possible?
The SEC later named the diagnostic failure.
This may be the most important finding in the case.
In a 2020 proceeding, the SEC found that Community Bank senior leadership had made statements and assurances to Wells Fargo management and its board that minimized the scope of the sales-practices problem. According to the SEC, those representations led key gatekeepers to believe the root cause was “individual misconduct rather than the sales model itself.” (SEC)
Read that distinction again.
Individual misconduct rather than the sales model itself.
That is a diagnostic failure.
Because once an organization decides the people are the problem, its interventions naturally follow that diagnosis.
Investigate the person.
Discipline the person.
Terminate the person.
Replace the person.
Close the case.
Then do it again when the behavior returns.
The existence of organizational pressure does not erase an employee's responsibility for unethical conduct.
But individual accountability does not erase leadership's responsibility to examine the environment in which that conduct keeps occurring.
Accountability and diagnosis are not opposites.
Put the case through PLS
This is precisely why I use the PLS Framework™ (Person–Leader–System).
Instead of asking which single explanation is correct, widen the diagnosis.
PERSON
Employees made choices.
The CFPB determined that employees opened unauthorized deposit accounts, submitted credit-card applications without consumers' knowledge or consent, enrolled consumers in online banking they had not requested, and ordered and activated debit cards without authorization. (Consumer Financial Protection Bureau)
Those actions matter.
Individual accountability belongs in the analysis.
LEADER
Leadership shaped the environment in which those choices occurred.
The independent investigation identified aggressive sales management and intense pressure as contributing factors. The SEC's later findings demonstrate why leadership's interpretation of recurring misconduct matters: when thousands of individual cases are understood primarily as individual failures, leaders can miss evidence that the operating model itself deserves scrutiny.
SYSTEM
Then there were the structures surrounding both.
Sales goals.
Compensation incentives.
Performance management.
Decentralized controls.
How risk information moved—or failed to move—through the organization.
The independent investigation found that Wells Fargo's decentralized structure and deference to individual lines of business contributed to the persistence of the environment. It also found that some corporate control functions took a narrow, transactional approach to individual complaints and lawsuits, missing opportunities to connect them in ways that might have revealed a more significant problem.
Person.
Leader.
System.
Not one instead of the others.
The question is where accountability belongs—and what intervention each part of the diagnosis requires.
Perhaps the most revealing problem: the information existed.
Thousands of investigations.
Thousands of terminations.
Disciplinary actions.
HR activity.
Customer complaints.
Risk information.
There were signals.
Yet the bank's independent directors reported that sales practices were not identified to the board as a noteworthy risk until 2014. Management subsequently reported that corrective action was working, but later reports did not accurately convey the scope of the problem.
The board said it did not learn that approximately 5,300 employees had been terminated for sales-practice violations until the September 2016 regulatory settlements.
Think about that.
The organization had been generating information about the problem for years.
But the people responsible for governing the enterprise did not have an accurate picture of its scale.
The failure wasn't simply that nobody knew anything. The organization wasn't adequately connecting what it knew.
And that should matter far beyond Wells Fargo.
HR may know about turnover.
Employee Relations may know about investigations.
Legal may know about claims.
Recruiting may know which roles cannot stay filled.
Operations may know where work repeatedly breaks down.
Managers may know where expectations are nearly impossible to meet.
Employees may know which processes they routinely have to work around.
Every piece can have an owner.
Every case can be handled.
Every file can be closed.
And leadership can still miss the pattern.
You don't need 5,300 cases before you look wider.
Wells Fargo is an extreme example. Most leaders will never encounter a pattern at this scale.
But patterns rarely begin at scale.
They begin with another resignation from the same team.
Another complaint describing the same leadership behavior.
Another person struggling with the same unclear expectation.
Another unsuccessful hire into the same role.
Another corrective action for behavior you've addressed before.
Another process everyone has quietly learned to work around.
The challenge is recognizing when another case has become another data point.
That doesn't mean jumping to a systemic conclusion.
It means becoming curious enough to test the diagnosis.
Because the wrong diagnosis creates the wrong intervention.
And sometimes the most consequential decision isn't what to do about the case in front of you.
It's deciding whether you're finally willing to examine what keeps producing it.
Take this into your next leadership conversation:
What has happened often enough in your organization that it has earned a wider diagnosis?
If something came to mind, resist the urge to prescribe the solution immediately.
Look at the Person. Look at the Leader. Look at the System.
Then decide what the evidence actually supports.
If your leadership team is managing a recurring people problem and needs an independent perspective to determine what is actually producing it, this is work I help organizations do.
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Kimberly D. Sanders is an Executive People Strategist and creator of The Third Perspective™ and the PLS Framework™. Her work helps leaders look beyond the first explanation, diagnose what is actually producing an outcome, and make better people and organizational decisions.
Diagnose before prescribing.
Sources
The factual record for this analysis comes primarily from the Wells Fargo Independent Directors' 2017 investigation, the SEC's 2020 Wells Fargo order, and the CFPB's 2016 Wells Fargo consent order. The organizational analysis and application of the PLS Framework™ are mine.
