Compliance expertise on a board of directors is becoming a topic of much greater public debate. The recent corporate scandal involving Wells Fargo speaks to the direct need to have both compliance and ethics expertise on a public company board of directors. The failures of the Wells Fargo Board were laid bare in the recent Independent Directors of the Board of Wells Fargo & Company Sales Practices Investigation Report by the law firm of Shearman & Sterling.
The Wells Fargo Board failures were both on the strategic and tactical levels. On the strategic level, there was a failure by the board to comprehend how the impossible sales goal of eight Wells Fargo banking products per customer created the toxic culture the bank engendered with its employees and customers. On the tactical level, the board accepted clear misrepresentations by bank senior management when tough questions were asked after the scandal was made public in both newspaper reports and in a civil lawsuit by the City of Los Angeles.
