One thing generally regarded as true re: Wells Fargo and its sales scandal (hey, remember that?) is that it wasn't a problem of bad individuals but one of bad culture. It's one thing to have an overly lax environment where those who are unburdened by ethics can get away with fleecing clients; it's another for that kind of behavior to be the norm.
But if the latter obtained at the red stagecoach – as Wells Fargo readily admits – the next question is how far throughout the company the cultural rot extended. So far, revelations of the bank's naughtiness have stayed pretty much entirely within the confines of its vast retail operation, from the checking/savings account shenanigans that kicked off the scandal to the auto insurance and mortgage issues that have since cropped up. The investment bank in particular has been spared.
One explanation is that Wells Fargo's I-banking operations are simply much smaller, which may allow for a culture to develop that's a bit more nuanced than the “fuck-you-sell-more” of the retail side. Another is that the businesses themselves are different enough for the retail operations to not really apply to those who structure deals and move derivatives around. There's no good corollary to sham accounts in the investment banking arm.
But if the last year has taught us anything about Wells Fargo, it's that we have to believe. Because if Wells Fargo does something, you better believe they can find a way to do it wrong:
Wells Fargo & Co. has fired four foreign-exchange bankers amid an investigation into that business by both the bank and regulators, according to people familiar with the matter and the bank.... The terminations occurred as the bank is conducting an internal investigation and as federal regulators have been examining practices in the business, according to a person familiar with the matter.
There's no indication from the WSJ report exactly what caused the issue, but it's fitting that it's in forex. Pretty much every other major bank has already shelled out some investor cash over currency trading antics. No longer is Wells the only forex survivor.
Whatever it was, however, the manager responsible has felt some heat:
The prior head of the foreign exchange group, Sara Wardell-Smith, was moved to a different role at the bank, the people said. Ms. Wardell-Smith’s LinkedIn profile refers to a role beginning in October leading part of Wells Fargo’s financial institutions group. She had held several roles in the bank’s foreign-exchange group after joining Wells Fargo in 1995 and led the group for the past decade.
So it could be just a chicken coming home (very late) to roost, more indicative of the broader industry than Wells Fargo's peculiar culture. But it's worth paying attention to. Toxic culture reportedly ran all the way to the top, as in the C-suite. Investment banking heads have gone on to higher positions in the bank and vice versa. Current CFO John Shrewsberry ran the division until being promoted in 2014, when Tim Sloan was promoted from CFO to lead wholesale banking, which oversees investment banking.
None of this means that we're about to see a flood of bad headlines out of Wells Fargo Securities. Forex guys do forex stuff, and that could be that. But this is Wells Fargo, after all.