The Wells Fargo fraudulent accounts scandal will be studied far and wide by many in the corporate world for multiple lessons—likely for years to come. One of the more recent developments which could portend some long-needed changes is in the arena of shareholder activism for better risk management. Reports have indicated that shareholders are seeking more information about the company’s risk management, directors’ suitability, and employee bonus payments.
One such request from Walden Wealth Management sought information about “the root causes of the fraudulent activity and steps taken to improve risk management and control processes” and “evidence that incentive systems are aligned with customers’ best interests.” Another request inquired into “how ethics are factored into pay had already been implemented.” Clearly the fraudulent account scandal has deeply troubled many of the bank’s investors. Wells Fargo has met with some investors, but has pushed back with others.
