Episode 732: Bad Form, Wells Fargo : Planet Money Banks like Wells Fargo have a weapon that can destroy an employee's career: A form. A long, boring form most people don't even know exists.

Episode 732: Bad Form, Wells Fargo

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A couple of weeks ago, we did a show about the massive banking scandal at Wells Fargo, how good employees were pushed to do some very bad things, like opening up bank accounts that customers never asked for.


And after the show aired, we talked to ex-employees who said, you know what? That fraud, the wrongdoing, the stuff that was going on, that's only half the story because what happened at Wells Fargo is still haunting many of us even years after we left.

SMITH: One of these ex-employees was Jeremy. He worked at a Wells Fargo branch in LA. He quit in 2008, and he just wanted to move on with his life.

JEREMY: I probably applied to every major bank out there from Bank of America, Washington Mutual, Wachovia.

SMITH: It was a stressful time. This is 2008. The world economy was collapsing. His wife was pregnant.

ARNOLD: And Jeremy wasn't making any progress until he got a lead on a banking job up in Silicon Valley.

JEREMY: So I drove up to San Francisco. I left at about 3 a.m. and made it up there in time for the interview. And I'll never forget meeting with this guy, a really nice guy. And he said, listen, man, you're exactly what we're looking for. You've got the drive. You've got the motivation. You know, you know the industry. Let's go ahead and let's go through the formalities and get you on the job. I got so excited and called up my wife - looks like we're moving to San Francisco.

SMITH: All right. Next day, fills out some forms for the HR department. They say they're going to check a few things. Jeremy waits a couple of days, waits a couple more days, doesn't hear anything.

JEREMY: After about a week, finally gave the HR lady a call and said, hey, just wanted to follow up, see what's going on in the process. She said, I'm sorry, we went with another candidate. I just sat there, hung up the phone. I thought to myself, I thought I had this job. What happened?

SMITH: Jeremy found out the answer to this question just a few weeks later.

ARNOLD: After another interview at a different bank, the hiring manager took Jeremy by the arm and pulled him outside the branch.

JEREMY: And she says, listen, I'm not really supposed to say anything because it's an HR issue, but I'll tell you I really liked you, but apparently there was a blemish on your - on your securities licenses that HR says that we can't hire you.

SMITH: She said it was on a document called a U5. This is a form in the banking industry. Essentially, it is a report card from all your former employers. And Jeremy, Jeremy didn't even know it existed. And yet someone had written something on there that made him unhireable.

JEREMY: And I said, what the heck is it? She says, I don't know. I - that's all I was told by HR.

SMITH: But Jeremy was pretty sure he knew who wrote the comment. It was his former employer, Wells Fargo.

ARNOLD: This moment right here has been playing out all across the country. We've talked to former Wells Fargo employees from Florida, New Jersey, Pennsylvania, Los Angeles, San Francisco. They all say the same thing. They say they pushed back against the crazy sales culture at Wells Fargo, and in retribution, the bank marked them with a scarlet letter, and that's really hurt their careers.


SMITH: Hello, and welcome to PLANET MONEY. I'm Robert Smith.

ARNOLD: And I'm Chris Arnold.

SMITH: Today on the show, we continue our investigation into the third-largest bank in the country, into Wells Fargo.

ARNOLD: And we go deep into this mysterious document that Jeremy found out about. It's called the U5. We'll tell you where it came from, how Wells Fargo branded their workers with it and how hard it's been for people like Jeremy to fight back.


SMITH: All right, Chris, I'm holding in my hand the document that ruined Jeremy's life. It is called the U5. And for something that is incredibly powerful, can be incredibly destructive, check out how boring it looks.

ARNOLD: It looks pretty innocuous and this is, like, something you'd fill out at the DMV.

SMITH: Yeah, there's 24 pages of boxes and lines and little circles you can fill in.

ARNOLD: At the top here, it's got Jeremy's full name. He only wants to use his first name because he doesn't want his career to be hurt even more.

SMITH: Before we reveal what was written on this U5, we wanted to tell you how the document, how the U5, was supposed to be used because, believe it or not, the U5 had good intentions.

ARNOLD: Right. And banking and investments, they used to be a little bit like the Wild West. I mean, someone would take your money and you had to trust that they wouldn't run off with your life savings. And there weren't a lot of people out there enforcing the rules.

SMITH: But we found one of them, one of these early investment banking sheriffs. He even has the voice of a sheriff.

TOM KREBS: My name is Tom Krebs, and I'm a securities attorney in Birmingham, Ala.

SMITH: Were you there when the form known as the U5 was born?


SMITH: You were there.

KREBS: I was.

SMITH: This was in the late 1970s. And Tom was working for the Alabama state Securities Commission. These are the people responsible for keeping an eye on all the stockbrokers and the investment folks in Alabama.

ARNOLD: Back in these days, there were the big, solid, reliable banks and investment firms, but there were also a lot of con artists in what were called boiler rooms. So you got some office in New Jersey with a bunch of crooks selling bogus investments over the phone.

KREBS: There wasn't a bad guy. There were a heck of a lot of bad guys. There were boiler rooms operating all over the country. There were oil and gas salesmen dumping fractional undivided working interests on Alabama (unintelligible).

SMITH: I don't understand what that is, but it sounds bad.

KREBS: Oh, it - we called them - we called them FUWIs.


SMITH: (Laughter) FUWIs.

KREBS: Yeah, fractional undivided working interests.

SMITH: Basically, it was part ownership in an oil well. And people would hock these as investment opportunities over the phone.

KREBS: We put one salesman in jail for having sold interest to a widow in Montgomery, Ala, for a 13.5 foot well.

ARNOLD: And my guess is there wasn't much oil down 13.5 feet, sir.

KREBS: There was nothing but still Texas sand.

SMITH: You do not mess with Tom Krebs, Alabama state Securities Commission.

ARNOLD: You do not, but Tom found that when they'd shut down one scam, his power only went so far. The people working the phones, they'd move to another state and just start dialing again.

KREBS: The problem was that there was no central point where a person could call and determine whether or not the person on the other end of the phone from them was indeed a licensed security salesperson.

SMITH: So Tom and the other state investment cops developed a computerized reporting system, a central place to keep track of the con man and the dodgy bankers.

ARNOLD: And they required legitimate investment firms and banks, too, to make a note if they fired somebody, if the employee was involved in fraud or was being investigated. That would get written down on that boring form that we were just looking at, the U5.

SMITH: What's up with the letter U, as in U5? Does U stand for something?

KREBS: Uniform.

SMITH: Uniform - and was there a U1, two, three, four?

KREBS: There is a U4, and I think there is a U3. I'm not certain about one and two.

SMITH: So this new system, it was uniform. It was standard. Tom says it did a lot of good. It made sure the con man couldn't just hop from company to company or bank to bank.

ARNOLD: And it wasn't just for investment cops. All banks could use this database. They could fill out a little note on a troublesome or maybe a dishonest employee. Not every employee at a bank, by the way, has to have a U5, but the ones who handle investments do, and there's a lot of them.

SMITH: And the next bank could just check out the U5 before they hire someone, read with the last bank wrote and make their decision. Essentially, it set up a system whereby the banks were policing themselves.

KREBS: It saved us a lot of time and a lot of resources.

SMITH: So this is the way it was supposed to work - a simple reporting tool for good banks to stop bad employees. But what happens when the bank itself becomes the problem, when there are bad managers? This is what we're hearing happened at Wells Fargo. The U5 became a weapon, a way to threaten and punish employees.

ARNOLD: Right. And if you remember our last podcast, we were following this former Wells Fargo employee named Ashley. And if she didn't meet her sales goals - or they called them solutions - two managers would take her into a back room, lock the door and they'd tell her...


ASHLEY: If you don't meet your solutions, you will be fired, and it's going to be on your permanent record. I mean, it was real. Like, you were stuck and it was the feeling that no other employer is going to want you because we will ruin you.

ARNOLD: Ashley didn't know if they were exaggerating at the time, but later, she found out that they weren't joking around. She was fired, and we helped her track down her U5, and right there on her U5 it says, quote, "failed to perform job duties." She says that makes it sound like she just didn't do any work. And she hasn't been able to get a job at a bank since. She's working for 12 bucks an hour.

SMITH: And, you know, even employees who were meeting their sales goals, some of them say that Wells Fargo was using the U5 against them, too. Jeremy, the employee we heard from at the beginning of the show who kept losing out on jobs, he says that his Wells Fargo bank branch was kicking ass. They were doing great, and he was being rewarded for it.

JEREMY: And I can tell you one time I got invited to go to a Lakers game and - with some other branch management, the district manager. And a couple of the branch managers sat down next to me and said, how are you guys getting your sales? What is your secret? So I broke it down for him, and I said here's what it is. There's a lot of people in our branch that are doing some shady things.

ARNOLD: That is, hitting their sales numbers by giving customers credit cards or checking accounts that they never asked for. In the bank, that was called gaming your sales numbers.

SMITH: And everybody in the branch knew about this, but this was Jeremy's chance to sort of share what was going on with the upper management.

ARNOLD: Tell them the truth.

JEREMY: I told the other managers, including the district manager, about the gaming that was going on and how I didn't - I didn't approve of it. I didn't like it. That was kind of a pivotal moment for me where I realized something was kind of weird going on. I spoke too much. It got back to my - to my manager, and he's like, buddy, what's going on here? My bankers don't game. You know this.

ARNOLD: Thing's got kind of cold and awkward for Jeremy in the office right after this. And his manager one day pulled him over and gets him on the phone with the district manager and makes him take back everything he'd said at the Lakers game.

JEREMY: You know, he basically told me lie for him.

ARNOLD: Lie for him.

SMITH: Jeremy kept complaining, though. He called the company's ethics line set up to detect fraud, but nothing happened. And in 2008, he was called into his manager's office, and Jeremy said he was told basically he could quit or the bank was going to open an investigation into him, whether he gave people accounts without their consent. And there was a good chance if that happened he'd be fired.

JEREMY: So anyway, I went to lunch and came back and I said, no, I'm out of here. I'm done.

SMITH: Jeremy walks out of the bank totally confident that he's going to get another job, but of course, he does not. He's turned down time and time and time again. That woman tells him there's a problem with your document, a problem with your U5. And all of a sudden, the whole thing comes back to him. He has to call up Wells Fargo, his former employer, and say, hey, send me a copy of that thing.

JEREMY: So I finally received the overnight mail. I open it up, and when I read what they wrote on there, I couldn't believe it. I was shocked. They had blatantly lied on my U5 saying that I admitted to opening up fraudulent accounts. I didn't open up fraudulent accounts. I was the one saying that this is what's going on. And so it - that's when it hit me, when I read this for the first time, that they were retaliating against me for what I did.

ARNOLD: To be clear, we don't know if Jeremy opened accounts for customers who didn't want them. He says he didn't. The bank put on his U5 that he did. We don't know if the bank was retaliating against Jeremy for blowing the whistle or if it actually had a good cause to fire him.

SMITH: But, Chris, this right here is the point of this whole story. We don't know what really happened because the U5 is not set up like a court of law where both sides tell their story and a judge decides. On the U5, the banks have almost all the power. They don't have to show any evidence. It's just their word.

ARNOLD: The bank does have to send a copy to the employee, but that can be after it's all done and written and the worker doesn't have any say. Jeremy says, in his case, he did not even see his U5 because the bank sent it to the wrong address.

SMITH: So how do you fight this whole thing? Jeremy looked into it, and he was blown away by how much it was going to cost him.

JEREMY: The lawyers wanted to charge a $10,000 to $20,000 retainer. And there is no guarantee that anything was going to be fixed. It was just merely to get them to say, OK, I'll work for you. It doesn't mean anything will be done.

SMITH: Once you want to challenge the U5, you are stuck in their system with their rules. The U5 is run by an organization called FINRA. It's the Financial Industry Regulatory Authority, which sounds like a government organization, right? But it is not. FINRA is an industry group with executives from financial firms running the place on their board.

ARNOLD: We talked to a recruiter who works for banks, and we showed her Jeremy's case, and she said basically he's out of luck. If he really thought that he had a case, he should pay whatever it takes for a lawyer because no one was going to hire him with this mark on his record.

SMITH: There may be one other way for Jeremy. He's in contact with a lawyer who's bringing a class-action lawsuit on behalf of former Wells Fargo employees. The attorney's name is Jonathan Delshad.

JONATHAN DELSHAD: A lot of the employees that call me, the one thing they're asking me for is, look, my U5 - what you call the banking report card - is it possible through your lawsuit to get my U5 cleaned up? Because that's what I care about most here. You know, they found jobs in other industries. But they - but they wanted to do banking. They had a career in banking.

ARNOLD: We wanted to see what the industry had to say about all this, so I called up FINRA, the organization that runs the U5 system. And I was asking them, look, I mean, we're hearing about this from all these workers who say they can't get rehired. And it seems like a really big problem. Are you guys doing anything about this? And today, they actually told me something new. They said we are doing something about this. We've started a review of the U5 forms that were filed by Wells Fargo in recent years. So they're taking another look at this. They wouldn't give me a lot of details. They wouldn't say how many workers, how long a period of time, but they're taking another look and this could be a big deal.

SMITH: We have also been calling Wells Fargo for their side of this story, and they provided a statement to us that said, quote, "it's disturbing to hear claims of retaliation against team members." The bank says it's investigating those claims and the bank also says it's assisting former employees to be rehired when possible.

ARNOLD: And as for Jeremy, the guy with the blemish on his U5, he actually found a workaround. And what he discovered was in consumer banking where he'd been working, they would always check his U5, but in business banking...

SMITH: ...Helping out small businesses open accounts and stuff.

ARNOLD: Right - he heard often they won't check the U5.

SMITH: So he rejiggered his resume, scored another interview and aced it.

JEREMY: I needed a job, I got the job, and I was set to go.

SMITH: And so far so good. He's moving up in the banking world. He's making more money. He's having some success.

ARNOLD: But Jeremy still worries. There's this bad comment from Wells Fargo, it's still there like a landmine on his U5, and someday somebody might check.

JEREMY: I try not to think about it, to be honest with you, because it scares the crap out of me. I can - everything that I've worked for these past eight years can be taken away from me because of this blemish, because of this lie, because of this - this one statement that Wells Fargo had put on there.

SMITH: Wells Fargo has apologized for a lot of things, but they have not yet talked about what happened to their ex-employees after they left the company.

ARNOLD: And Jeremy and those other employees we talked to, they all say the bank owes it to them to get this career-ending stain off their records.


SMITH: We're going to keep pursuing this Wells Fargo story. So if you worked at the bank and there is some surprising part of this scandal that we don't yet know, you should contact us, especially if you're one of the people who wrote out negative comments on someone else's U5. We would love to talk to you. You can email us at planetmoney@npr.org or reach us on Twitter or Facebook.

ARNOLD: Today's show was produced by the wonderful and amazing Elizabeth Kulas. Special thanks to Neal Carruth, Uri Berliner and Melanie Marshak (ph).

SMITH: Now that you've finished PLANET MONEY, I know you're just sitting around going, like, I've possibly listened to the very last podcast I can think of. What will I listen to next? Well, you are in luck because NPR has a new podcast called The Big Listen. And the point of the show is to tell you other things you can listen to. Find The Big Listen on the NPR One app or wherever you find your podcasts. I'm Robert Smith.

ARNOLD: And I'm Chris Arnold. Thanks for listening.

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