In what may be the most innocent violation to emerge out of Wells Fargo in years, the WSJ reports that Wells has fired or suspended more than a dozen employees in its investment bank and is investigating dozens of others over violations of the company’s expense policy regarding after-hours meals.
According to the report, Wells Fargo employees ranging from analysts to managing directors in New York, San Francisco and Charlotte, doctored receipts on dinners that they charged to the bank.
“We became aware that certain Wells Fargo Securities team members were not complying with the after-hours meals reimbursement policies after they were brought to the attention of our leaders by concerned team members,” a Wells Fargo spokeswoman said in a statement. “We took action to address the issue and we continue to investigate the matter.”
Wells Fargo, like most other big banks, reimburses staffers for food that they order when they have to stay late at the office to work on deals and other assignments for clients. Some bankers have been known to fabricate the receipts entirely, getting reimbursement cash for a “meal” that was never ordered.
In this particular case, the violation was far less serious: as the WSJ reports, executives within the investment-bank division learned that some employees regularly placed dinner orders through delivery services like GrubHub, Seamless or Square’s Caviar earlier than the policy allowed, the people said. Later, employees allegedly altered the time stamps on emailed receipts to make their meals eligible for reimbursement.
That discovery kicked off an internal review into months of expense filings that resulted in employees being fired or placed on administrative leave and that caused a delay in bonuses that were due to analysts earlier this summer, the people said. Since May, at least nine Wells Fargo analysts and associates have been terminated or have resigned voluntarily after the bank alleged they altered their meal receipts, according to a review of Financial Industry Regulatory Authority records. Banks generally have 30 days to update Finra records.
Of course, as anyone on Wall Street knows, this is a generally accepted practice across most banks, where management typically turns a blind eye and pretends not to notice this modest perk, traditionally taken advantage of by junior bankers, and which ultimately does not hurt shareholders as most of the expenses end up getting comped by clients as part of a far bigger bill.
According to some studies, fake expensing by bankers had been a major driver for the New York restaurant industry which was hurt in the aftermath of the financial crisis, when banks clamped down on the practice of expensing large meals altogether.
However, some more enterprising companies found workarounds: last year, Maloney & Porcelli created an “expense-report generator” that lets you take the total you spent on your meal (or essentially any figure that you choose) and created fake cab, office supply, and cheap-o meal receipts so your boss won’t know about the filet mignon and merlot you had on the company’s tab.
Some took offense at this perk that allowed starving bankers to go back to enjoying their $21 shrimp cocktails, $44 rib steaks ($10 sides are extra), and $46 filet mignons. Incidentlaly, Maloney & Porcelli, is located in the middle of Bank Row in Manhattan’s Midtown East, at the nexus of JP Morgan, UBS, and the former Bear Sterns buildings. Praised as the “best business lunch in NYC” by Gourmet Magazine, they were certainly feeling the pinch.
And now in order to demonstrate just how “clean” it is, Wells decided to pull the practice altogether and soon most other banks will have to follow suit.
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