Posted by Justin Ihnken.

For many years, especially those who found themselves in an area of economic success, investors who succeeded because they worked with a financial advisor. The roll of the advisor is to assist individuals in asset portfolio management. Investments in both fixed market vehicles, and those driven with equity in the market, have [for the majority of advisors] been the number one and two sources of financial security investments. Both of these categories are tied together with the strategic planning and goal orientations of specific individuals. This theory comes primarily because “your advisor” would allocate dollars in a way that would ultimately secure monies for specific reasons and even more so, provide an aspect of future practical growth.

As time continues, there are still many individuals that work with advisors and insist that they do planning and individual investments on their own. Coming changes in investments will show that there is a driving need for RIA’s (Registered Investment Advisor). Unfortunatly, the traditional fixed income and equity allocations are rather lacking for specific individuals that wish to diversify their portfolios accordingly. A recent study done by Bridget Bearden, director of retirement research at fund industry consultant, Strategic Insight, went as far as to say many folks do not understand that the effects of falling short on their diversification strategy may have a serious impact in the long run.

“The fund industry generally advocates a 10 percent to 20 percent allocation to liquid alternatives for risk mitigation. But many off-the-shelf asset allocation portfolios seem to fall short of that.”

Many RIA’s are of traditional thought, however the coming realization of alternative investments is proving itself to be a more prominent tool to properly advocate clients. An example of a small and “up and coming” firm that shows its mindset is multiple footsteps ahead of the curve would be that of Circled Squared Alternative Investments. Circled Squared was founded in 2014, by Jeffrey Sica, CEO and President of Sica Wealth Management. With the changing times and ability to allocate dollars properly will prove to be a huge outlet for this small powerhouse. In an interview with a Berkshire Hathaway associated press, Sica spoke on his outlook and thoughts on the future for both Circle Square and alternative investments.

Add to this the inescapable conclusion that investors are growing increasingly dissatisfied with the stagnant performance and unacceptable volatility they’re getting from traditional investments like stocks and bonds, and you have a situation in which advisors have fewer and fewer ways to provide value to their clients.

As the stock market continues to be a murky water, few dare to try to understand the various inlets and outlets of the market. With the change of alternative investments slowly phasing themselves into our everyday planning as RIA’s, we must work above and beyond the curve and enable our’ clients and potential clients alike to take advantage of the various opportunities that alternative investments withhold.

**About Circled Square Alternative Investments

“Circle Squared Alternative Investments is a firm devoted to providing independent financial advisors with access to a range of innovative alternative investments previously available only to institutions and ultra-high net-worth investors. The suite of investment products will include real estate, private equity, private credit, natural resources, private placement offerings, entertainment and media.”

Justin is a student at the Stillman School of Business, Seton Hall University.

Sources:

1. D’Allegro, Joe. “A Retirement Riddle Placing $1 Trillion at Risk.” Cnbc.com. CNBC, 10 Nov. 2015. Web. 12 Nov. 2015.

2. Healy, Andrew. “Jeff Sica Launches New Alternative Investments Firm for RIAs; Unlocks Door to ‘Real Economy’.” Business Wire: A Berkshire Hathaway Company. Berkshire

Posted by Justin Cunha.

The federal government’s rollback of many different rules has been a highly discussed topic throughout media, however one of the topics that is truly standing out currently is net neutrality. Net neutrality is a principle in which internet services have to treat all data equally and not charge consumers for any specific data. This was put in place by the Obama administration but was removed last year. The event created a lot of outrage as “more than 20 states” have challenged this decision in court (Kang). On Friday August 31, 2018, California lawmakers passed a bill that guaranteed full and equal access to the internet and is the fourth state to create a new net neutrality law.

The state put the bill in place in order to block internet services from slowing down, blocking, or charging for specific services. The bill not only reinstates net neutrality, but it is also even stricter than the one put in by the Obama Administration. The bill would prohibit promotions of free streaming for apps, something that telecommunication companies are pushing to endorse. Prohibiting the promotions would put businesses on a more even playing field, as there are many business who simply do not have the resources to put out these promotions. The change would also ensure that streaming websites all put out the same speed and quality without charging an extra price. These changes are all in an attempt to restrict the amount of power these services have over consumers and the industry. This would be California’s second major internet law in the last year, recently creating a privacy law that allowed users to ask companies such as social media platforms what data they are collecting on them. California is very influential to the rest of the world, with New York already considering a bill similar to this one. One example of the influence the state has was its auto emission laws which inspired many other states to follow in their direction, and in turn giving telecommunication companies worry that something similar will follow.

Though telecommunication companies are attempting to challenge this decision. The companies feel that having these strict rules put on them would hinder their ability to grow and develop. For example, the strict rules will hinder these companies from trying out different business models and thus hurts innovation. Such is the example with the promotion of free streaming for apps, as this was one major experimentation that these businesses wanted to try out. President of US Telecom even argues that, “The internet must be governed by a single, uniform and consistent national policy framework, not state-by-state piecemeal approaches” (Kang). This quote emphasizing that these telecommunication companies want to flow the singular federal law and that these states are simply complicating their business. The companies even went out to promise that they would not slow down or block any websites, a major concern that many consumers had. Telecommunication companies, just like California, do have a lot of influence and power that could possible stop this bill from being implanted. In 2017 they blocked a state broadband privacy bill and are looking to do the same with this bill.

Governor Brown has until the end of September to make his final decision on the matter, and sign his name on the bill. The bill is heavily consumer friendly attempting to give everyone equal access to the internet. This does restrict some freedom of these telecommunication companies, however some restrictions need to be put in place. Power can corrupt and promises can be broken, thus giving these companies too much power can be a scary prospect. So even though there are some flaws with this bill, since it is one of the strictest net neutrality bills, I do believe that California is making the right decision.

Source: https://www.nytimes.com/2018/08/31/technology/california-net-neutrality-bill.html?rref=collection%2Fsectioncollection%2Fbusiness&action=click&contentCollection=business&region=rank&module=package&version=highlights&contentPlacement=1&pgtype=sectionfront

Justin is an accounting major at the Stillman School of Business, Seton Hall University, Class of 2021.

Posted by Charles Bond.

My article is about the people who feed millions of Americans, farmers. Specifically, a ruling the USDA first tried to implement, but then decided to rescind. This ruling would have offered more protection for farmers who raise cows, pigs, and chickens for the largest meat producers in the United States. The USDA’s plan would have made it easier for farmers to sue those meat producers they are in contract with for unfair, discriminatory, or deceptive practices. This was a policy that was set to be enacted at the end of the Obama Administration but was put on hold until the Trump Administration took over; the USDA under the new administration decided to drop it. “Currently, several court rulings have interpreted federal law as saying a farmer must prove a company’s action harm competition in the entire industry before a lawsuit can move forward.” The farmer’s cannot just say they believe a company is aiming to cause harm; they must prove the company said this was their intent.  Passing the new rule would ease the burden of finding proof.

This new rule would have been extremely beneficial for chicken and pork farmers. “Chicken and pork producers must enter long-term contracts with companies like Tyson Foods and Pilgrim’s Pride that farmers allege lock them into deals that fix their compensation at unprofitably low levels and forces them deeply into debt.” Farmers are unaware of the repercussions of these deals until it is too late to do anything about them. The National Chicken Council President was strongly against this rule and thought the rule would have “opened the floodgates to frivolous and costly litigation.” Politicians are split on the ruling. Senator Pat Roberts was pleased with the rule being dropped stating, “It demonstrates the Trump administration’s commitment to promoting economic prosperity and reducing regulatory burdens in rural America.” Meanwhile Senator Charles Grassley criticized the rule being shot down saying ,“The USDA is the U.S. Department of Agriculture, not the U.S. Department of Big Agribusiness.”

This is a complicated issue, with reasonable arguments on both sides. However, it seems unreasonable not to have this rule. It is proven that meat producers exploit farmers across the board just so they can maximize profit and keep the farmers reliant on them for business. An argument made against the rule was that it opens the floodgate for farmers to bring cases against the companies, whether they have sufficient evidence or not. If the companies really were doing no wrong than they would not care because the cases would always go there way and secondly the ruling is only being implemented because so many farmers are claiming the companies are doing wrong and they have means to bring them to court. It really is a dicey issue, but ultimately the farmers should be allowed to take the companies court and have the law settle the disagreement.

Charles is a sports management major at the Stillman School of Business, Seton Hall University, Class of 2020.

Source:

https://www.nytimes.com/aponline/2017/10/18/us/ap-us-farm-rules.html

Posted by Connor O’Reilly.

On October 15th California Governor Jerry Brown signed several employment related bills into effect. These bills have been crafted and designed to change laws regarding the state’s employers. “The newly-enacted laws address a range of topics, including criminal conviction history, salary history and sanctuary immigration policy.”

The governor’s first major law bans inquiries regarding salary history when applying for a new job. “California will now prohibit all employers from inquiring about or relying upon salary history information of an applicant as a factor in determining whether to offer employment or an applicant’s salary.” This law was created in order to deter pay inequalities in regards to gender, race and ethnicity. This bill adds a completely new section to the Labor Code which applies to employers on both a state and federal level.

Next, California just passed a “Ban the Box” law which prohibits pre-application questioning regarding criminal records. In an effort to thwart discrimination and promote equal opportunity employment, “California will now prohibit all employers with five or more employees from inquiring into or relying upon an applicant’s criminal conviction history until an applicant has received a conditional offer of employment.” Further, if an applicant has a criminal record, employers are required to conduct individualized assessments on the conviction history including severity of the offense, the time that has passed and the nature of position sought. Their decision must be calculated, explained to the applicant, and be in compliance with California’s Fair Pay Act.

Additionally, California now declares itself a Sanctuary State and will prohibit employers’ compliance with newly passed federal immigration laws. This controversial law makes it illegal for employers to voluntarily permit federal immigration agents from searching private workplaces without a warrant. There are also several other regulations regarding time requirements before searches and harder requirements to obtain Employment Eligibility Verification from already employed workers. The penalties are extremely harsh for disregarding these laws which range from $2,000 to $10,000.

Without a doubt, California is creating laws that give more power and rights to workers. By eliminating salary history in the application process, each applicant will be given a salary solely based on their skills. California’s “Ban the Box” laws also promote equality in hiring and negate discrimination towards people with criminal records. Yet the new law prohibiting businesses from complying with Federal laws is extremely concerning and shocking. This is clearly a backlash at President Trump and his harsh crackdown on illegal immigrants, yet it will prove to be very taxing on the business owners of California. Overall, I believe California is creating important laws to give rights back to the working class, but creating laws that go against federal law will cause issues down the road.

Connor is an business administration major at the Stillman School of Business, Seton Hall University, Class of 2020.

Source:

https://www.natlawreview.com/article/recent-deluge-california-legislation-imposes-new-requirements-employers

Posted by Sheyenne Hurt-Lewis.

General Motors created millions of vehicles with defective ignition switches. This defect is linked to more than 100 deaths and 200 reported injuries. Many lawsuits have arisen from these defective switches which makes General Motors likely to face a large sum of punitive damages which, “could amount to millions, if not billions of dollars,” as stated by Judge Gerber. Punitive damages are those intended to punish the wrongdoer and deter others from similar wrongdoing. “GM had sought to block plaintiffs, including those suing for personal injury or wrongful death, from making punitive damages claims.” The recent defects ignited numerous other complaints of other GM cars recalled in 2014 that were “equipped with a faulty ignition switch that can slip out of the run position and disable safety features including air bags.” The effects of these defects have resulted in numerous injuries and lost lives.

Robert Hillard is representing nearly 1,500 plaintiffs suing GM for the injuries and deaths that are tied to the defective ignition switch. Hillard is confident that his clients are capable of being awarded the punitive damages they are seeking. GM has already spent $575 million to settle Hillard’s cases but there are still a large number of cases that remain unsettled. In September, GM agreed to pay nearly $900 million to settle a case similar to this. In addition to this payment, they were also forced to pay a $35 million fine for failing to report the defect themselves when they were first made aware of it. The company created a compensation fund of $625 million for victims.

GM attempted to restructure, and split into “New GM” and “Old GM.” Old GM kept all liabilities but agreed to be held responsible for “future product-liability cases involving other vehicles.” Judge Gerber wrote, “New GM may be held responsible, on claims for both compensatory and punitive damages, for its own knowledge and conduct” on the basis that workers were aware of the defective switch and related accident claims. However, it was made clear by Judge Gerber that punitive damages can only be sought against New GM if and only if it’s solely on the basis of the conduct or knowledge of New GM.

Sheyenne is a management major at the Stillman School of Business, Seton Hall University, Class of 2018.

Posted by Johnny A. Guerrero.

This article was published by the New York Times on 26 November 2017 and was written by Stacy Cowley.  The article illuminates the tension between a high-ranking government civil service official, Ms. Leandra English, and the President of the United States, Mr. Donald Trump.  To further understand this dilemma, one has to first comprehend what is “the Consumer Financial Protection Bureau” and what do they do.  For starters, the Consumer Financial Protection Bureau, “was created six years ago to oversee a wide variety of financial products, including mortgages, credit cards, bank accounts and student loans” (Cowley).  With this in mind, one can say that the bureau was a regulator created in the aftermath of the global financial crisis that hit the New York Stock Market Exchange harshly.  The “Regulatory Agency,” also referred to as (CFPB) was created by the Obama Administration to protect consumers from the tyrants of Wall Street.  Thus, the agency is charged with overseeing financial products and services, as noted.

The tension raised because Ms. English, the deputy director of the bureau, was not willing to step down from her post because she believed that the President could not fire or replace her.  So, she “filed a lawsuit late Sunday night on 26 November 2017 to block Mr. Trump’s choice of someone else from taking control of the agency on Monday morning, 27 November 2017” (Cowley).  Ms. English was defending her cause because Congress gave the agency infrequent independency and autonomy to protect it from political interference.  Thus, the bureau’s director “is one of the few federal officials the President cannot fire at will” (Cowley).  However, the President nominates the agency’s director, who is subject to the approval and confirmation of the United States Senate.  Ms. English was not nominated by former President Obama; she was appointed director by the agency itself because the director, Mr. Richard Cordray, brusquely stepped down on Friday 24 November 2017.

To add more fire to the already burning wood, Ms. English, a seasoned agency veteran who rose progressively through the agency’s ranks, was being replace by Mick Mulvaney, Mr. Trump’s budget director.  Paradoxically, Trump wanted someone who saw the bureau as “sad, sick, a joke” (Cowley), and who openly supported legislation to eliminate it, as the agency’s new director.  Ethically this is not right.  Why appoint someone who speaks harshly about the agency to be its head?  Mulvaney, a white-collar professional, many believed would undo what the bureau had achieved since its conception, which was to protect consumers from the abusive debt collectors and politics of Wall Street Financiers.  This notion becomes eloquent with Senator Dick Durbin’s, a Democrat from Illinois, metaphor: “Wall Street hates it (the Agency) like the devil hates holy water” (Battle for Control of Consumer Agency Heads to Court, New York Times Article).

However, even though one may think that the President’s choice is ludicrous, he as the Head of the United States Government has the authority to appoint whoever he wants as the head of any Federal Government Agency.  Ms. English did not have the grounds to veto the President’s decision; after all the actual director, Mr. Cordray, was the one who resigned.  Therefore, it is the President’s duty to appoint a new head leader for the agency.  The law regarding Presidential Nominees is clear, “not grey.”  One must hope that Mr. Mulvaney does a good job protecting the American People from the Wall Street Tyrants, as he swore to do.

Johnny is in the dual B.A/M.B.A program at the College of Arts and Sciences (political science, minor in history) and the Stillman School of Business (management and finance), Seton Hall University, Classes of 2018 and 2019.

Source:

Posted by Brandon Bartkiewicz.

It has been almost two years since the Wells Fargo scandal broke into the headlines. It is not out of the ordinary to see a bank involved in shady activities; just look at the recession. However, in 2016, Wells Fargo committed a truly unforgivable crime, identity theft and fraud on a massive scale. To refresh, Wells Fargo had “… secretly opened millions of deposit and credit card accounts that may not have been authorized by customers, and that ultimately harmed those who had entrusted their financial affairs with the bank”. The goal of this was to create an illusion of more “sales” (accounts being opened). They did this by transferring money between accounts without permission of the accountholder. These activities were highly encouraged by an incentive system in place that would reward employees for opening accounts. Everyone was in on this; bank managers pressured their employees, and the executive board of Wells Fargo knew this was going on and did not stop it. By August 2017, the investigation found that as many as 3.5 million unauthorized accounts existed in Wells Fargo’s records.

The news of this wide scale fraud fueled a settlement with the U.S. Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency and Los Angeles legal officials, totaling $185 million in penalties. Along with this, Wells Fargo would give “… $80 million in refunds — $64 million in cash and $16 million in account adjustments — to more than 570,000 auto loan customers who were charged for auto insurance without their knowledge.” As it should be, the bank is now in financial trouble as it tries to cover all of the direct and indirect costs relating to the scandal. However, the Janet Yellen and the Federal Reserve is not done disciplining the bank. Due to their “widespread customer abuses and compliance breakdowns,” the bank is now restricted from growing any more than its total asset size in 2017.  Along with this, the bank will remove some of the senior ranking executives in the company.  This is done to ensure that Wells Fargo will have sound business practices before it can grow again.

Personally, I believe that punishments handed down by the Federal Reserve were suitable for Wells Fargo. It provides a clear message to all banks that business malpractice is unacceptable and will be punished by harsh penalties. No bank should be able to get away with using client money and creating unauthorized accounts for personal gain. I wish the American legal system were stricter with companies so it would deviate them from doing illegal acts like this in the first place. What I did not like about this case was the fact that there are still plenty of people who have been long time officials of the company and are still employed by Wells Fargo. If you keep many of the same old pieces in place at a company, something like this is bound to happen again.

Brandon is a finance major in the Stillman School of Business, Seton Hall University, Class of 2020.

Source:

Link: https://www.usatoday.com/story/money/2018/02/02/fed-limits-wells-fargos-growth-citing-consumer-abuses/302973002/

Posted by Daniel Szatkowski.

According to Chris Bruce in a Bloomberg article dated October 17, 2017, Wells Fargo was found charging costumers fees to lock interest rates on mortgages and other loans made with the bank. The lock rate fees earned by Wells Fargo are up to $98 million in the period of approximately four and half years ending February 2017. Wells Fargo incorrectly claims that their clients are behind and/or missing payments, which would lead to increased interest rates. Instead of increasing the rate, Wells Fargo tells them to pay rate-lock fees to keep the rate where it is.

The manner in which Wells Fargo is charging lock-rate fees is unethical. First of all, many of the Wells Fargo clients were not actually behind on their loan payments. According to Brian Brach and other mortgage applicants, “Wells Fargo employees wrongfully blamed customers for loan processing delays and made them pay fees to maintain a lock on interest rates that might otherwise expire.” The delays were caused by Wells Fargo, which triggered the rate-lock fees; therefore, no fees should have been issued to the clients.

Wells Fargo wanted to unethically increase their profit by charging these rate-lock fees even though they did not apply to the situation. The company’s reputation will drop due to the new unwanted press and the clients are putting Wells Fargo on trial. The first of the reimbursement will be sent out during the final quarter of this year.

Daniel is an accounting major at the Stillman School of Business, Seton Hall University, Class of 2020.

Posted by Varundeep Singh.

Over the past few years Wells Fargo employees have been secretly scheming customers and breaking rules and crossing ethical boundaries that should not be crossed. Wells Fargo employees were making “dummy accounts,” or best described as fake accounts, to meet their sales quotas and receive bonuses. These accounts were not authorized, but they still somehow made the bank a lot of money because Wells Fargo customers were being charged random fees that were not rightfully associated to them. The employees went as far as making fake emails and fake pin numbers to make these accounts look real and make them work. In the article it states, “The scope of the scandal is shocking. An analysis conducted by a consulting firm hired by Wells Fargo concluded that bank employees opened over 1.5 million deposit accounts that may not have been authorized.” This shows how huge the scandal really was and how far the employees at Wells Fargo went just to meet their quota.

In many cases, the employees would take money out of customers accounts and put it into the fake accounts. This would lead to over draft fees because customers would not have enough money in their account. Wells Fargo was charging these fees and making money off of their customers who did nothing wrong. This dilemma with Wells Fargo shows how corrupt big banks can be and how much stricter they need to be on their employees. 1.5 million fake accounts is a lot of illegal activity and the fact that the company took so long to catch on shows that their management was really weak and careless. This is morally wrong and Wells Fargo should have been fined more than they did get fined.

Wells Fargo’s agreed to pay $185 million in fines and $5 million in refunds to their customers. Many people feel that they were let off too easy because the scope of this scandal was much more humongous and impacted people more. With all these dummy accounts, it is evident that Wells Fargo definitely schemed more than $5 million from customers.

I believe that a big bank such as Wells Fargo should know where they stand and by letting a scandal like this happen; they have shown that they cannot be trusted. In my opinion Wells Fargo should have faced much bigger consequences and by paying such a small amount of money and firing 5300 employees within two years they were still let off very easily. All in all, the Wells Fargo scandal will forever be an example of how big banks cannot be trusted and how there should be stricter regulations towards these banks. Something like this should be avoidable in the future if the right actions are taken now.

Varundeep is a finance and management major at the Stillman School of Business, Seton Hall University, Class of 2019.

Posted by Frankie Panicucci.

Wells Fargo is a corporate bank with very high and unrealistic sales targets. To meet these unrealistic sales targets Wells Fargo employees were secretly opening millions of unauthorized bank and credit card accounts for customers without their knowledge. These unauthorized accounts that were created racked up fees and allowed Wells Fargo to make more money. The accounts that were created started all the way back in 2011. The company then learned of this behavior and fired about 5,300 employees over the years. In order to pull off the scheme, the employees transferred funds from a customer’s original account into a new one without their knowledge, and it is estimated that around 1.5 million accounts were created. Customers were then being charged for over drafting or not having enough of a minimum balance in the original account. Employees also submitted over five hundred thousand applications for credit cards without the customer’s knowledge. Some of these accounts were charged over $400,000 in fees.

Wells Fargo was eventually caught committing these crimes after being investigated by the Consumer Financial Protection Bureau (CPFB). Wells Fargo is being fined with the largest fine since the CPFB’s inception; a fine of $185 million and also must refund customers $5 million. Of the $185 million, $100 million will go to the CFPB’s penalty fund, $35 million to the Office of the Comptroller of the Currency, and $50 million will go to the City and County of Los Angeles. As part of the settlement Wells Fargo also needs to make changes to its “sales practices and internal oversight.” The CPFB declined to mention how the investigation began.

The initial suspicions of accounts being created for customers began when some customers complained to Wells Fargo about unauthorized accounts that were created on their behalf. L.A. City’s Attorney, Mike Feuer, says, “Consumers must be able to trust their banks.” Feuer sued Wells Fargo in May of 2015 in relation to the unauthorized accounts. Once the suit was filed, he began to receive calls and emails from customers regarding the issue. Wells Fargo hired a consulting firm to look into the allegations after the suit was filed. After the investigation Wells Fargo released an internal statement which says, “At Wells Fargo, when we make mistakes, we are open about it, we take responsibility, and we take action.”

Frankie is an economics and finance major at the Stillman School of Business, Seton Hall University, Class of 2019.

Posted by Gurpreet Kaur.

CNN Money released an article on Well Fargo’s employees secretly withdrawing money from customers’ bank account and transferring to new accounts since 2011. The article was published on September 8th of this year and Wells Fargo bank was forced to fire 5,300 employees in Los Angles for setting up accounts for customers. This fraud was taking place without any of the customers’ knowledge. After this fraud, many customers were fumed because their bank accounts were unsafe. The employees’ fraud was unethical and illegal because they were creating credit card accounts without letting their customers know.

Brian Kennedy, a Maryland retiree, was one of the victims and he told CNN Money “he detected an unauthorized Wells Fargo account had been created in his name about a year ago. He asked Wells Fargo about it and the bank closed it.” Wells Fargo’s customers had trust in the bank. The victims of this fraud could have filed for refunds, but it wasn’t necessary because Wells Fargo agreed to refund 5 million dollars to them. The settlement in Los Angles required Wells Fargo to warn their California customers to shut down their unrecognized accounts. The fraud caused the bank to unemployed 5,300 workers over these five years.

Richard Cordray is the director of the Consumer Financial Protection Bureau and he said, “Wells Fargo employees secretly opened unauthorized accounts to hit sales targets and receive bonuses.”  Those employees transferred funds from customers’ accounts without their knowledge to new accounts they created. Customers were upset because they were facing overdraft fees and insufficient fees. Wells Fargo stated, “We regret and take responsibility for any instances where customers may have received a product that they did not request.” Wells Fargo’s market valuation was the highest in America, but the fraud led to lawsuits against Wells Fargo. In May 2015, “Feuer’s office sued Wells Fargo for authorizing accounts” and “after filing the suit, his office received more than 1,000 calls and emails from customers as well as current and former Wells Fargo employees about the allegations.”

Gurpreet is an accounting major at the Feliciano School of Business, Montclair State University, Class of 2019.

Posted by Anna Fintor.

Wells Fargo is currently involved in a legal scandal in which it is said to have opened bank accounts and credit cards without the costumer’s consent. According to Reuters, “The U.S. Consumer Financial Protection Bureau and other regulators ordered United States’ third-largest bank by assets to pay $190 million in fines and restitution to settle civil charges.” The scandal has been going on for several years and there were as many as 2 million accounts opened illegally.

Wells Fargo has been known for its “high-pressure” sales culture, which one of my personal friends who has worked in one of the branches can account for. The Bloomberg article I have read describes how anonymous users have been posting cartoonish videos on YouTube presenting the negative work atmosphere at Wells Fargo. The videos show how management pressured and threatened workers that if the unreasonable goals were not met the workers would be let go.  It is suspected that the videos were created by employees as far back as in 2010.

While reading the articles, I remembered one of the discussions from class of how in large corporations top executives can pressure the bottom level workers to commit the illegal activity. One of the YouTube videos shows that bankers received $5 McDonald’s gift cards for opening a new account, while the executives received generous bonuses. In my opinion that’s very unethical and just wrong.

In the recent weeks the CEO, Jhon Stumpf has resigned and Wells Fargo continues to be under investigation. I feel like this situation is going to hurt Wells Fargo not only financially but also create bad reputation. Due to the popularity of social media, the videos will spread to a vast number of the population, including to those who may not be keeping up with the news.

Anna is an accounting major at the Feliciano School of Business, Montclair State University, Class of 2018.

Sources:

https://www.bloomberg.com/gadfly/articles/2016-10-21/psst-regulators-watch-videos-for-bank-scandal-after-wells-fargo

https://www.bloomberg.com/gadfly/articles/2016-10-21/psst-regulators-watch-videos-for-bank-scandal-after-wells-fargon fines and restitution to settle civil charges

http://www.reuters.com/article/us-wells-fargo-accounts-california-idUSKCN12J2O

Posted by Alexa Constantine.

The New York Times on October 11th of this year released the article describing Wells Fargo’s fraud scandal that was brought to the public eye last month. The ethics scandal came to light last month, but the fraud has been going on for years, maybe even a decade with the first report in 2005. Julie Tishkoff in 2005 wrote to the Wells Fargo human resources about how she saw employees setting up sham accounts, forging customer signatures, and the sending out of unsolicited credit cards. Her complaining went on for four years. Tishkoff was not the only employee who was complaining to the internal ethics hotline, the human resources department, and to the managers and supervisors.

In 2011, John G. Stumpf, the board chairman, received at least two letters from Wells Fargo employees describing the illegal activities they have witnessed. Mr. Stumpf became president the year Julie Tishkoff wrote to human resources. In September of this year, Mr. Stumpf testified in front of Congress, twice, stating that, “he and other senior managers only realized in 2013 that they had a big problem on their hands — two years after the bank had started firing people over this issue.” In 2013, Wells Fargo launched the internal investigation within their company for the fraud they realized that was happening. But by then, the prosecutors and regulators caught on and in May of 2015 a lawsuit was filed. The Los Angeles city attorney filed the lawsuit for the creation of unauthorized accounts against Wells Fargo. The case was settled this September of 2016.

After the lawsuit settled, Mary Eshet, spokeswoman for Wells Fargo said, “We have made fundamental changes to help ensure team members are not being pressured to sell products, customers are receiving the right solutions for their financial needs, our customer-focused culture is upheld at all times and that customer satisfaction is high.” And since September 8th, Wells Fargo will pay $185 million in fines for the opening about two million customer accounts and credit cards without authorization. Wells Fargo is taking responsibility for the scandal and is making changes to the company.

The scandal still continues after the settlement. Former employees whose are suing Wells Fargo state that many of the managers at the branch level and the people who heard their ethics complaints are still employed. The employees who complained and brought to light the fraud within the company lost their jobs shortly after they complained. Between 2011 and this year, Wells Fargo terminated the employment of 5,300 workers, “around 10 percent of those worked at the branch manager level or above, according to the bank, but only one — an area president — had a high-level management role.” The whistleblowers lost their jobs while the people who should have acknowledged the fraud kept their jobs. Mr. Stumpf acknowledged the outrage of former employees about how the bank should have heeded what they said were warning and taken action earlier by saying, “We should have done more sooner.” Mr. Stumpf’s answer does not satisfy former employees.

Alexa is an accounting major at the Feliciano School of Business, Montclair State University, Class of 2019.

Posted by Ivanna Klics.

There has been quite a ruckus at Wells Fargo as they made headlines for causing fraudulent transactions that have not been authorized by the customers themselves. Wells Fargo is being accused for creating banking and credit card accounts without the permission of its customers. Who are the customers more to blame then the CEO, John Stumpf; however, in his defense, he is not capable of overlooking every branch in the bank. Stumpf’s leaders have not only stepped out of their comfort in the company but the reputation of the company, as well as opening up the door to a criminal investigation case.

The investigation has put the company to shame. Stumpf appears to be clueless of what has been going on literally right under his nose. Because it is almost impossible for these events to occur overnight, management should have known about it for a long time. Whether Stumpf admits it or not, Charles Gasparino stated “he and the bank will still face numerous civil and criminal inquiries for years to come.”

Although the company does not mean all harm, Wells Fargo is still one of the most profitable banks worldwide; however the company’s perception has had a dramatic change. Currently the company is facing a congressional investigation, and who knows if they will be able to build back their reputation.

Ivanna is an accounting major at the Feliciano School of Business, Montclair State University, Class of 2019.

Posted by Dylan Beland.

One of the most talked about issues in business law news is the Wells Fargo scandal. The story behind this scandal is that the Department of Justice and many attorneys are investigating the possibility that Wells Fargo has millions of fake accounts opened at their banks. The result of the investigation was Wells Fargo had to pay a 185 million dollar fine.  Wells Fargo had to let go over 5,300 workers for fraudulent sales tactics.

From this, the concern and worry in the banking industry instigated a lot of questions about the fake accounts being opened. Employees were pushed to reach near-impossible sales targets, which in turn led to the creation of fake accounts. Mike Mayo, a banking analysist at CSLA, said the investigation “reflects pent-up frustration by the public over the lack of accountability at big banks post financial crisis.”

The people that could see some blame for this are the investors of the banks. One of Wells Fargo’s biggest investors has not spoken, since the situation has arisen. Warren Buffett is Wells Fargo’s biggest investor and he owns Warren Buffett’s Berkshire Hathaway.

On September 20, Wells Fargo is meeting with the Senate and is having John Stumpf, CEO, represent and testify at the hearing. He apologized for the fake accounts but also said he does not plan on resigning from being CEO of Wells Fargo.

Dylan is an accounting major at the Feliciano School of Business, Montclair State University.

Posted by Carter McIntosh.

On November 5th, 2015, the Department of Justice announced that Wells Fargo failed to notify bankrupt homeowners of mortgage payment increases. Wells Fargo was required to pay out $81.6 million to “homeowners after reaching a settlement with the Department of Justice’s U.S. Trustee Program over the banks ‘repeated failures’ to provide Bankrupt homeowners with legally required notices of mortgage payment increases.” The Federal Bankruptcy Rule 3002.1 requires mortgage creditors (Wells Fargo) to file and serve a notice 21 days before adjusting a Chapter 13 debtor’s monthly mortgage payment.

The failure that sparked Wells Fargo’s fine was the fact that in Chapter 13 bankruptcy cases they did not file and serve the mortgage lenders with a notice 21 days before Wells Fargo adjusted the monthly mortgage payment. In fact, when the DOJ pursued this case, “Wells Fargo acknowledged that it failed to timely file more than 100,000 payment change notices and failed to timely perform more than 18,000 escrow analyses in cases involving nearly 68,000 accounts of homeowners in bankruptcy between Dec. 1, 2011 and March 31, 2015.”

The $81.6 million settlement that Wells Fargo agreed to pay to the homeowners within the time period listed above is made to several different groups of borrowers. The first group, which consists of $53.6 million of the $81.6 million, will go to “more than 42,000 homeowners whose payments increased as to which Wells Fargo failed to timely file a PNC with the court, each homeowner will receive on average $1,254.”

The next group, which consists of $10 million, will go to “crediting homeowners’ accounts at the end of their Bankruptcy cases.” The third group, which consist of $1.5 million, will go to “refunding in cash about 3,000 homeowners where notices of decreases in monthly payments were not timely provided and the homeowners paid more than the actual amount.” The fourth group consists of $1 million and will go to “refunding in cash to about 2,400 homeowners who satisfied escrow shortages by making a lump sum payment.” The fifth group consists of $4.5 million and will go to “crediting mortgage escrow accounts of about 6,000 homeowners who did not receive timely escrow statements.”

The sixth group, which consists of $4 million, will go to “paying about 12,000 homeowners by crediting mortgage accounts where Wells Fargo failed to timely perform an escrow analysis.” The seventh group, which consists of $4 million, will go to “refunding in cash about 6,000 homeowners who did not receive timely escrow statements.” The eighth and final group, which consists of $3 million, will go to “remediation to about 8,000 homeowners which has already been completed.”

According to Director Cliff White of the U.S. Trustee Program, he is “pleased that Wells Fargo has acted responsibly by accepting accountability for its deficient bankruptcy practices, agreed to compensate affected homeowners for those deficiencies and committed to making necessary improvements in its Bankruptcy operations.”

Carter is a finance major at the Stillman School of Business, Seton Hall University, Class of 2018.

Posted by Alhanouf Almubarak.

This case discusses Tesco the Britain’s biggest retailer accounting scandal. In October 2014, the Serious Fraud Office (SFO) began a criminal investigation into accounting practices at Tesco. Chris Bush, (Tesco’s former managing director), Carl Rogberg (former finance chief), and John Scouler (former food commercial head) were charged with fraud over an accounting scandal after the company announced that it had overstated its first-half profit by approximately $420 million. At that time the company suspended many executives for accounting irregularities.

Some of the reasons why Tesco overstated the expected profits of the group at that time was mainly because it agreed on commercial deals with suppliers too early. The investigations against Rogberg, Scouler and Bush revealed that they purposely falsified Tesco’s digital accounting records and its draft interim accounts by the “inputting of and/or reliance upon commercial income figures which gave a false account of the financial position of Tesco.” (Butler,2017). The offenders’ crime by abuse their position and fraud accounting can lead to prison sentences of up to 10 and seven years respectively.

Posted by Noah Stanton.

On the 16th of October, the Supreme Court has made the decision to proceed on the dispute between government authorities and technology companies like Microsoft, who are being forced to give emails and other digital information “sought in criminal probes but stored outside the U.S.” According to the article, justices intervened in a case of federal drug trafficking investigation where they needed emails that Microsoft had on its servers but were beyond the search warrant being that the servers are in Ireland. The Supreme Court decision is impeding investigations, according to the Trump Administration and 33 states. Cases regarding terrorism, drug trafficking, fraud and child pornography are all being delayed because courts are waiting on the ruling regarding obtaining information that is kept abroad.

This case is among many that tech companies like Microsoft about digital privacy that might relate to crime and extremism. This Supreme Court case is an example of finding the balance between older laws and recent technological developments. Microsoft is saying, “Congress needs to bring the law into the age of cloud computing” where most information is not held in the jurisdiction of current law. Back in 2013, a warrant issued to obtain emails pertaining information about illegal drug transactions. Microsoft cooperated but went to court at the time because the emails held at servers overseas were not handed over.

A Justice Department lawyer stated Microsoft can retrieve emails stored domestically or not with a single click of a button. The simplicity of the action does not change the boundaries the warrant has though. All of these troubles relate back to the 1986 Stored Communications Act, which has minimal use when information is held overseas. The article states, “The current laws were written for the era of the floppy disk, not the world of the cloud.”

The president of Microsoft said Congress needs to act by passing new legislation. This would help put an end to the numerous legal actions that take place about officials trying to obtain private information from U.S. based tech companies because they keep servers around the world. The court is expected to confront the issue of emails from an American citizen or foreigner and where they reside. The Supreme Court Case will take place early next year.

Noah is a business administration major at the Stillman School of Business, Seton Hall University, Class of 2020.

Posted by Brandon Bartkiewicz.

It has been almost two years since the Wells Fargo scandal broke into the headlines. It is not out of the ordinary to see a bank involved in shady activities; just look at the recession. However, in 2016, Wells Fargo committed a truly unforgivable crime, identity theft and fraud on a massive scale. To refresh, Wells Fargo had “… secretly opened millions of deposit and credit card accounts that may not have been authorized by customers, and that ultimately harmed those who had entrusted their financial affairs with the bank”. The goal of this was to create an illusion of more “sales” (accounts being opened). They did this by transferring money between accounts without permission of the accountholder. These activities were highly encouraged by an incentive system in place that would reward employees for opening accounts. Everyone was in on this; bank managers pressured their employees, and the executive board of Wells Fargo knew this was going on and did not stop it. By August 2017, the investigation found that as many as 3.5 million unauthorized accounts existed in Wells Fargo’s records.

The news of this wide scale fraud fueled a settlement with the U.S. Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency and Los Angeles legal officials, totaling $185 million in penalties. Along with this, Wells Fargo would give “… $80 million in refunds — $64 million in cash and $16 million in account adjustments — to more than 570,000 auto loan customers who were charged for auto insurance without their knowledge.” As it should be, the bank is now in financial trouble as it tries to cover all of the direct and indirect costs relating to the scandal. However, the Janet Yellen and the Federal Reserve is not done disciplining the bank. Due to their “widespread customer abuses and compliance breakdowns,” the bank is now restricted from growing any more than its total asset size in 2017.  Along with this, the bank will remove some of the senior ranking executives in the company.  This is done to ensure that Wells Fargo will have sound business practices before it can grow again.

Personally, I believe that punishments handed down by the Federal Reserve were suitable for Wells Fargo. It provides a clear message to all banks that business malpractice is unacceptable and will be punished by harsh penalties. No bank should be able to get away with using client money and creating unauthorized accounts for personal gain. I wish the American legal system were stricter with companies so it would deviate them from doing illegal acts like this in the first place. What I did not like about this case was the fact that there are still plenty of people who have been long time officials of the company and are still employed by Wells Fargo. If you keep many of the same old pieces in place at a company, something like this is bound to happen again.

Brandon is a finance major in the Stillman School of Business, Seton Hall University, Class of 2020.

Source:

Link: https://www.usatoday.com/story/money/2018/02/02/fed-limits-wells-fargos-growth-citing-consumer-abuses/302973002/

Posted by Brennan Smith.

A judge, a deputy constable, and a supervisor of all police, fire, and emergency operations walk into a bar…

Although a common play on the setup of a hysterical joke, the indictment of John I. Waltman, Robert P. Hoopes, and Bernard T. Rafferty is not something the members of Bucks County and Lower Southampton Township are laughing about. The three men named are the judge, supervisor, and deputy constable—respectively—referenced above, who just got indicted for money laundering.

Here’s what happened: “The trio conspired to launder about $400,000 in funds represented by investigators to be the proceeds of health care fraud, illegal drug trafficking and bank fraud, according to a federal court indictment unsealed Friday morning, a statement from the U.S. Attorney’s Office said. The men allegedly took laundering fees of $80,000,” (theintell.com). In order to launder the money, the trio went through a series of processes. One source of revenue, and by far the most prominent one, was through Raff’s Consulting LLC—a company with which Rafferty had full control—with which the three used “bogus documents” in order to turn a profit.

To understand how they did this, the facts of the case must be examined. Per the research done by theintell.com, Robert P. Hoopes would arrive to an office building in an unmarked Lower Southampton Township Police car, exchange the false documents for $100,000 cash, and bring the money back to the car (where John I. Waltman and Bernard T. Rafferty would be waiting). From there, Waltman and Rafferty would go to the Philadelphia Credit Union to deposit the money—after paying Hoopes and pocketing their own cuts—into the Raff’s Consulting LLC accounts. The operation lasted from June 2015 to November of 2016 with the trio laundering $400,000 between June and August of 2016—earning $80,000 in laundering fees (Philadelphia.cbslocal.com).

Because of their crimes, the FBI was forced to get involved and finally caught them in an undercover sting. The three will each face one count of conspiracy to commit money laundering, and three counts of money laundering. District Judge John I. Waltman has been suspended without pay, with the other two removed from their positions.

Brennan is a sports management and marketing major at the Stillman School of Business, Seton Hall University, Class of 2019.

Sources:

http://www.theintell.com/news/crime/bucks-county-district-judge-constable-lower-southampton-public-safety-director/article_f23e17b6-f07a-5e1b-8abb-6edf11a47ecc.html

(Article)

http://philadelphia.cbslocal.com/2016/12/16/authorities-judge-director-of-public-safety-deputy-constable-charged-with-conspiracy-money-laundering/

(Article)