A Wells Fargo Bank is shown in Charlotte, North Carolina, U.S., September 26, 2016. REUTERS/Mike Blake

NEW YORK (Reuters) - The Financial Industry Regulatory Authority said it fined several Wells Fargo & Co businesses, RBC Capital Markets, LPL Financial and others a combined $14.4 million on Wednesday for record-keeping problems that may have allowed company and customer documents to be altered.

The securities industry’s self-regulator found that the firms failed to keep hundreds of millions of electronic documents in a “write once, read many” format, which would have made it impossible to alter or destroy records after they were written.

The firms agreed to the fines but neither admitted nor denied the charges.

FINRA did not say documents had been changed but said the records were “pivotal to the firms’ brokerage businesses,” and that it relies on these files to ensure firms are following securities laws.

The regulator said it also is concerned about the security of the records because hackers in recent years have aggressively targeted banks’ electronic storage databases.

The regulator fined Wells Fargo’s securities and prime brokerage businesses $4 million, and the bank’s brokerage and independent wealth management businesses $1.5 million. FINRA also fined RBS Securities, SunTrust Robinson Humphrey, Georgeson Securities Corp and PNC Capital Markets amounts ranging from $2 million to $500,000.

Wells Fargo spokeswoman Elise Wilkinson said the firm took record-keeping compliance seriously.

“We self-reported these issues to FINRA and continue to remediate as agreed,” she said in an emailed statement.

RBC declined to comment. LPL and the other companies named did not immediately respond to requests for comment.</s>NEW YORK (Reuters) - The Financial Industry Regulatory Authority said it fined several Wells Fargo & Co businesses, RBC Capital Markets, LPL Financial and others a combined $14.4 million on Wednesday for record-keeping problems that may have allowed company and customer documents to be altered.

The securities industry's self-regulator found that the firms failed to keep hundreds of millions of electronic documents in a "write once, read many" format, which would have made it impossible to alter or destroy records after they were written.

The firms agreed to the fines but neither admitted nor denied the charges.

FINRA did not say documents had been changed but said the records were "pivotal to the firms' brokerage businesses."

The regulator fined Wells Fargo's securities, prime brokerage, brokerage and independent wealth management businesses. It also named RBS Securities, SunTrust Robinson Humphrey, Georgeson Securities Corp and PNC Capital Markets.

Wells Fargo spokeswoman Elsie Wilkinson said the firm took record-keeping compliance seriously.

"We self-reported these issues to FINRA and continue to remediate as agreed," Wilkinson said in an emailed statement.

RBC, LPL and the other companies named did not immediately respond to requests for comment.

Read the original article on Reuters. Copyright 2016. Follow Reuters on Twitter.</s>The year 2016 will not end on a high for Wells Fargo, by the look of things. FINRA has fined the bank, as well as a few other institutions, for a combined US$14.4 million. Apparently, all of these banks suffer from record-keeping problems that could have lead to company and customer documents to be altered. … Continue reading FINRA Fines Various Banks Over Bad Record-Keeping Practices

The post FINRA Fines Various Banks Over Bad Record-Keeping Practices appeared first on NEWSBTC.

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Also, Like us on facebook</s>The U.S. Financial Industry Regulatory Authority (FINRA) announced on Wednesday it has fined 12 firms a total of US$14.4 million for record keeping deficiencies that violated federal securities laws and regulatory rules.

FINRA found deficiencies in the preservation of records in a format that prevents those records from being altered. The firms failed to maintain certain electronic records in "write once, read many" (WORM) format, which prevents the alteration or destruction of records stored electronically, FINRA says in a statement. The WORM deficiencies affected millions, and in some cases, hundreds of millions, of records, FINRA adds.

The sanctioned firms include: RBC Capital Markets LLC and RBC Capital Markets Arbitrage S.A., which were jointly fined US$3.5 million; Wells Fargo Securities, LLC and Wells Fargo Prime Services, LLC, which were jointly fined US$4 million; and, RBS Securities, Inc., which was fined US$2 million.

The firms settled the cases without admitting or denying the charges, but consented to the entry of FINRA's findings.

"These disciplinary actions are a result of FINRA's focus on ensuring that firms maintain accurate, complete and adequately protected electronic records. Ensuring the integrity of these records is critical to the investor protection function because they are a primary means by which regulators examine for misconduct in the securities industry," says Brad Bennett, executive vice president and chief of enforcement at FINRA, in a statement.</s>In early December, three whistleblowers filed a case against Prudential, alleging that they were fired as a result of bringing up a troubling pattern related to Prudential insurance sales made through Wells Fargo bank. The suit indicates that Prudential knew Wells Fargo was signing up consumers for Prudential’s MyTerm insurance without their knowledge or permission.

The suit, filed in New Jersey state court, indicates that Prudential knew as early as January 2015 that irregularities in the accounts existed. Wells Fargo has been in the news this year for fraud. To meet sales and other quotas, Wells Fargo employees signed customers up for bank services and accounts they didn’t request and in many cases were not aware of.

The recent whistleblower suit indicates that the pattern of fraudulent behavior to make quotas was not confined to bank products alone, but extended to other products from financial companies who made sales through Wells Fargo, such as Prudential.

The suit indicates that MyTerm insurance has sold primarily to low-income customers with Hispanic last names. The customers tended to not renew these policies, and Prudential’s internal staff noticed that many e-mails sent to these clients — as many as 700 of them — were being returned as undeliverable. Both lack of renewals and patterns of nonresponse can indicate fraud.

One then-internal regulator who is part of the suit suggested calling these clients to determine whether they understood the product they were buying, as part of a review.

According to the suit, her supervisor indicated that Prudential did not want to focus on the issue, and was also concerned about being linked to Wells Fargo’s troubles with fraud. Her recommendations were not acted upon.

The employee and two others were later terminated by Prudential. The company maintains that the terminations have nothing to do with discussions about the potentially fraudulent pattern.

Prudential has said it will reimburse the affected customers.

Employees raising red flags about potential fraud within financial companies was also a feature of the Wells Fargo case. The U.S. Occupational Health and Safety Administration (OSHA) received 65 complaints by Wells Fargo employees about the company creating conditions in which employees opened fraudulent accounts.

The complaints also show that government regulators and Wells Fargo itself knew of these conditions as early as 2010. The complaints began in 2010 and continued until this year.

Wells Fargo employees sent the charges to the Whistleblower Protection Program, a government program whose mandate is enforcement of whistleblower laws.

It is increasingly clear that whistleblowers are in the forefront of protecting citizens against fraud and waste in organizations around the country. The number of whistleblower cases has risen sharply over the past 26 years. In 1987, just 30 whistleblower cases were filed nationally. In 2013, 753 cases were filed.

The False Claims Act protects whistleblowers against retaliatory action such as termination, suspension or other discriminatory action related to their whistleblower activities.

If the whistleblower is found to have been let go or otherwise mistreated as a result of their whistleblower activities, they are entitled to reinstatement at the seniority level they had and double any amount of back pay they may be owed, plus interest.

This is just another blow for Wells Fargo, who have had a 2016 that they would like to forget. We will see if they’re able to move past it.</s>Wells Fargo CEO John Stumpf came under harshcriticism from all sides after 5,300 employees and managers at the bank’s retail division were fired for their role in purpose­fully opening unauthorized accounts in the names of their customers in order to reach daily and weekly quotas and earn incentives.

Just days before Stumpf was excoriated by Sen. Elizabeth Warren and other members of the Senate Banking Committee, he was also grilled by Jim Cramer, the bombastic host of CNBC’s “Mad Money,” who is not known for hard-hitting Q&As with corporate leaders. Cramer read a headline aloud from the Wall Street Journal: “Wells Fargo CEO defends bank culture. Lays blame with bad employees.”

“That’s not you. You’re the head coach,” Cramer said incredulously. “You told me you’re the Vince Lombardi. Vince Lombardi never blamed a lineman.”

Few, if any, rushed to Stumpf’s defense, particularly since reports of employees gaming Wells Fargo’s cross-selling incentive program surfaced more than two years earlier. Still, any sales manager who runs an incentive program in order to drive performance may now fear facing similar circumstances

 if rogue salespeople rig the system in order to chase after incentives.

How Not to Be the Next Wells Fargo

 Executives and sales managers don’t need to worry about their incentive efforts going off the tracks if they follow simple rules, says Tim Houlihan, vice president of the Reward Systems Group at BI, a global engagement agency that helps companies drive performance, in part through the use of incentive programs. The first rule of thumb, says Houlihan, is to pay attention to the environment you create.

“If more than 5,000 employees were involved (and let go), this is absolutely an environment that allowed — maybe even supported — such practices,” Houlihan says. “As Buckminster Fuller noted, ‘Don’t change the man, change the environment.’ If the environment supports something, it becomes the social norm and rules — written in rule books not in weekly team meetings — take a back seat.”

Houlihan offers three key tenets of incentive programs and posits where Wells Fargo missed the mark with each.

1. Rules need to account for likely gaming.

Solution: Write the rules in such a way that eliminates, or at least minimizes, gaming.

Houlihan: It’s a naïve structure to reward people on new accounts without any accommodation for closed accounts. Telecommunications companies (especially wireless firms) and cable companies reward employees for new accounts and they do it under the provision that accounts that get cancelled counteract the new account signups. In the world of insurance, the underwriting department controls for phony signups. In medical devices, there’s a lengthy stream of processes to insure that the technology was actually installed in the patient. The Wells Fargo rules were poorly written.

2. Incentives should be short term, otherwise they become compensation.

Wells Fargo’s problem: The program ran for months. It was part of the culture and the comp plan — it was not a per se incentive.

Solution: Running an “incentive program” for months (years!) on end, is tantamount to making it central to compensation. People who were hired during that period were told they would get rewarded for opening new accounts as part of their compensation (or that it was a requirement to maintain employment). Either way, it was normalized in the comp plan, not a one-off initiative to boost new account openings.

Houlihan: There are two primary environmental ways to get new accounts: carrots and sticks. The stick is “open X new accounts or lose your job.” When the task is difficult and easy to game, people will look for ways to circumvent the spirit of the objective with methods that support their desire to keep their job. The carrot is “open new accounts and get paid for them.” It’s also possible that the comp plan was structured in such a way that put significant emphasis on new account openings — a lever made it worthwhile to game it. The more tenured employees (or possibly even the frontline managers) coached them on how to use it and probably abuse it. Both the carrot and the stick could have been used — the double whammy. One of the things we watch for in designing incentive programs is rewarding an appropriate amount for the task.

Wells Fargo’s problem: The rules didn’t allow for oversight.

Solution: When rewards are contingent on revenues, a common way to eliminate or minimize gaming is to audit the results.

Houlihan: Who’s watching the store? When part of compensation (or maintaining employment) requires new account openings, there needs to be someone internally verifying the tasks really happened. Banks are known for checks and balances (no pun intended) and Wells Fargo’s failure is a grave misstep in checks and balances. Harvard Business Review reported that “fraudulent account openings continued even after the bank was aware of it and had fired employees for it starting in 2011.”

Houlihan adds, “[behavioral economist] Dan Ariely’s research on cheating indicates that many people — in fact the vast majority of us — cheat in some small ways, like exceeding the speed limit, or not telling the server that he failed to charge you for a glass of wine, or taking a pen home from work. The research indicates that very few people cheat in big ways. Ironically, the (few) big cheaters don’t cause near the same level of problems as the many small-change cheaters in the world. My point is that widespread cheating at Wells Fargo was, at some level, endorsed. It was big enough to get 5,300 people fired. And it caused lots and lots of pain to the company.”</s>NEW YORK (AP) — Wells Fargo’s embattled CEO John Stumpf is stepping down as the nation’s second-largest bank is roiled by a scandal over its sales practices.

The San Francisco bank said Stumpf is retiring effective immediately and also relinquishing his title as chairman. He won’t be receiving severance pay and the bank announced earlier that he will forfeit $41 million in stock awards.

Wells Fargo’s chief operating officer, Tim Sloan, will succeed Stumpf as CEO and join the company’s board. Sloan has been with Wells Fargo for 29 years. Stephen Sanger, the bank’s lead director, will serve as the board’s non-executive chairman.

Stumpf’s end at Wells Fargo comes a little over a month after the bank was fined by California and federal regulators $185 million over its sales practices.

The regulators alleged employees trying to meet aggressive sales targets opened bank and credit card accounts, moved money between those accounts and even created fake email addresses to sign customers up for online banking — all without customer authorization. Debit cards were issued and activated, as well as PINs created, without customers’ knowledge.

“I wish I could snap my fingers and make everything all right again, but it’s going to take time,” said Sloan said in an interview late Wednesday. “We are going to make it right by our customers and we are going to work to win that trust back.”

Stumpf, a 34-year veteran of the bank who took over as CEO in 2007, had previously gained acclaim for navigating Wells Fargo through the financial crisis and keeping it free of scandal. But he came under withering pressure over the alleged misconduct, believed to have gone on at the bank for years. Some 5,300 lower-level employees were fired.

“While I have been deeply committed and focused on managing the company through this period, I have decided it is best for the company that I step aside,” he said in a prepared statement Wednesday.

Among Stumpf’s critics, Democratic Sen. Elizabeth Warren of Massachusetts told him at a Senate Banking Committee hearing last month that he should resign and “give back the money you took while the scam was going on.”

News of Stumpf’s departure, however, did little to quell some lawmakers’ anger over the affair or their demands for information from the company on how harmed customers and employees will be made whole.

Senate Banking Committee Chairman Richard Shelby, R-Ala., and the panel’s senior Democrat, Sherrod Brown of Ohio, said Wednesday that Stumpf’s retirement doesn’t answer important questions.

“We are still waiting for answers as to how Wells Fargo plans to right its wrongs against customers and the low-paid employees who weren’t given the benefit of a retirement package when they were fired for refusing to cheat,” Brown said in a statement.

Stumpf earned $19.3 million last year. But he and Carrie Tolstedt, the executive who ran the retail banking division, will forfeit millions.

Tolstedt announced in July that she would retire from the bank this year and had been expected to leave with as much as $125 million in salary, stock options and other compensation. She was stripped of $19 million of her stock awards, and her departure was made immediate.

The revelations have sparked investigations by federal agencies. The bank’s independent directors have also launched their own investigation.

Wells Fargo is scheduled to report its quarterly results Friday morning. In after-hours trading, its stock rose 76 cents, or nearly 1.7 percent, to $46.08.</s>These two companies have gotten a lot of press this past year that basically describe the difference between two world views.

First, General Electric (NYSE: GE) has been moving more and more into computer software and desires to become a top ten software company by 2020. It is doing well in this effort.

Wells Fargo (NYSE: WFC) has gained the headlines this year because of its emphasis upon personal incentives to sell accounts, deposit accounts and insurance, among others. Records have indicated that many of the incentive programs were originated as early as 2005.

General Electric has gone though several years of restructuring in which it has discarded some of its old-line consumer products division and its financial division, and attempted to move into what it sees as the future.

Wells Fargo has been praised for sticking to a basic model of the banking business and not gone off into ideas of becoming an investment bank or some other kind of financial conglomerate.

General Electric has moved from a return on shareholder's equity of slightly under 10.0 percent in the depths of the Great Recession in 2009 and has now returned to an ROE of 13.6 percent in 2015, with an expected performance of 14.5 percent in 2016. Some analysts are placing the ROE for 2017 in the 17.0 percent level.

Wells Fargo is just going in the opposite direction. The bank has been praised during the current economic recovery for maintaining the highest ROE of the major commercial banks in the country by keeping this measure in the 11.0 percent to 12.0 percent range. The bank was given high marks for keeping its business model consistent with fundamental banking services.

After posting a 12.5 percent ROE in 2014, the numbers began to slip, falling to a 11.2 percent level in 2015 and an expected 10.0 percent return in 2016. Some analysts are seeing an even lower outcome in the next year or two.

The current position of the two organizations point to how these organizations have changed to adapt…or, not adapt…to the changes taking place in the world.

Wells Fargo kept the older banking model, which helped them navigate through the Great Recession and the years directly following. But, it has stayed with the older banking model for too long and this has caused the bank to push too hard to achieve performance standards stemming from the older banking model, when the bank was earnings returns of 16.0 percent to 18.0 percent.

General Electric, known as a manufacturing giant, gained more and more of their profits in the 1990s and 2000s from the financial divisions it created and promoted. In many years, GE earned well over 50 percent of its profits from these financial areas.

This period of time is becoming known as the glory days of financialization, the economy and economic resources moved more into the financial services, drawing resources away from manufacturing and industry.

Following the Great Recession, however, Jeffrey Immelt, GE's CEO began to redirect the company, getting out of financialization while moving toward software.

Now we are really beginning to comprehend what a difference this is making in the company…and, in the economy.

But, this is happening all over. Can you imagine, for example, the manufacturer's of cars becoming a software company? Yet, to get into a new car today a person is overtaken with all the software applications that exist. And, then there are the tremendous efforts being made to make driverless cars. And, the list can go on.

Much of banking, however, still seems to be stuck in the past. One reason for this, of course, is that the financial area, especially banking, is so heavily regulated.

New regulations, like the Dodd-Frank financial law placed huge costs on the banking industry and has caused a restructuring that is still going on. And, most efforts, especially among the smaller banks, seem to dominated by people who have been looking backward for banking models, not looking forward. Wells Fargo must be included in this list.

What would happen, I have asked, if some banks stated that they wanted to become major software companies sometime in the 2020s?

A quick response to this question is that the regulators won't allow it to happen.

I don't know, actually. My friend says her primary bank doesn't have branches. She can write checks on her account. She can obtain cash through ATMs that take her debit card. Her deposits are done automatically as with most of her bill payments. She doesn't have any debt but a mortgage, obtained on line, which is paid monthly through an automatic transfer. She has credit cards but they are paid off at the end of each month. And, she runs her investment portfolio through this account, obtaining CDs, Treasury securities, stocks and bonds, ETFs, mutual funds, and so on.

What is wrong with this model? My guess is that it is the model that most current teenagers will be most comfortable with as they move on in life.

The future of banking is not going to be determined by banking organizations that rely on trading profits to support their ROEs. In fact, in my mind, higher interest rates will not save the banking industry this time around. Oh, it will buy some banks time, but the future of banking is going to be much different than the past.

General Electric is moving in the right direction and the advancement of its ROE is proof of that.

Wells Fargo has some real problems it must deal with. And, the downgrading of its ROE reflects this.</s>The former Wells Fargo CEO wanted everyone who did business with the bank to have eight different products. If you opened a checking account with a Wells Fargo banker, Stumpf wanted you to have a savings account, a line of credit and a business line of credit as well. While you’re at it, who’s servicing your mortgage? And wouldn’t it be wise to get another credit card?

But eight wasn’t only the number of accounts Stumpf wanted every customer to have. According to former Wells Fargo employees who were interviewed following the scandal that broke this fall, eight was also the number of accounts personal bankers were expected to open every day. “You’d be calling friends and asking, ‘Please let me open you an account. I don’t want to be in here on Saturday,’” one former banker told reporters from the National Public Radio program “Planet Money.”

Things caved in on Stumpf and Wells Fargo in September when it was reported that state and federal agencies were investigating the bank for fraudulent activity. It turns out employees signed up customers for 2 million accounts they did not authorize and Wells Fargo charged more than $1.5 million in fees for those unwanted accounts. Wells Fargo fired 5,300 employees, mostly entry-level and middle managers. The New York Times reports that bank employees had informed bank executives of sham accounts being opened as early as 2005, the year Stumpf became the bank’s president, and the bank reportedly fired employees in 2011 for similar actions.

Incentives take a hit

 The Wells Fargo brand has taken a beating and Stumpf, 63, resigned after several weeks of showing how not to lead a company through a crisis. But the bank is not the only one that’s been bruised. Many stories on the debacle focused on the bank’s incentive program, which rewarded employees who hit daily and monthly targets, and punished those who didn’t. (Wells Fargo quickly announced it was eliminating sales goals, incentives for opening new accounts and some of the cross-selling strategies that led to the mess.)

“The key to success will be a new culture built around a more balanced approach to managing sales,” wrote marketing and sales consultant Sally E. Lorimer along with Andris A. Zoltners and PK Sinha of business consulting firm ZS Associates in an online post for Harvard Business Review. “This new approach will require using tools other than incentives — for example, interesting work, enhanced processes for selecting salespeople and managers, training and coaching, information sharing, empowerment, teamwork, manager assistance and supervision, and improved performance management systems — to motivate salespeople and guide and control sales behaviors. Other companies would be wise to take the time to examine their own sales culture and ask whether incentives might be clouding otherwise good judgment.”

Nick Clements, who left the world of consumer banking to create MagnifyMoney.com, a price comparison website, wrote on Forbes.com, “When properly designed, incentives can align the goals of employees with their employers. But incentive schemes do not live in a vacuum. The corporate culture that accompanies incentives can have a meaningful impact on how employees behave. Often, incentives can lead to cheating and the destruction of shareholder value. Without proper systemic controls and a strong corporate culture, the temptation to cheat (in order to avoid termination) can influence decisions.”

A sure sign of amateurs

 However, in a separate Forbes.com article, business coaches Bill Fotsch and John Case state, “The problem doesn’t lie in incentives or any other specific practice; it lies in how those practices are implemented and managed.”

Precisely, says Tim Houlihan, vice president of the Reward Systems Group at BI, a global engagement agency that helps companies drive performance, in part through the use of incentive programs.

“From an industry insider, this smacks of a do-it-yourself project. Someone inside Wells Fargo came up with what they thought was a good idea and executed it without proper vetting,” Houlihan says. “People who don’t normally design incentive programs were given authority to develop a plan, appropriate budget and write the rules without oversight. Such a plan is amateurish if it didn’t take into consideration the potential consequences of the activities and the rewards.”

Houlihan says businesses that follow some basic strategies when structuring their incentive programs will avoid the traps that Wells Fargo fell into. (See his three key tenets of incentive programs here)

Company values must be at the core

 Stumpf’s initial response to the media and when he appeared before members of Congress was to accept accountability personally, but he followed that up quickly with statements blaming rogue employees who were not monitored carefully enough. That rubbed a lot people the wrong way.

“This was an epidemic. This was not a few rogue employees,” says Dan Ariely, a behavioral economist who has written books on cheating and, most recently, motivation in the workplace. “It was a part of the culture to say we are willing to do things that are not permitted by the rules for our own financial well-being.” Ariely said he closed his own personal accounts in response to the banking scandal.

In his new book “Payoff: The Hidden Logic That Shapes Our Motivations,” Ariely writes that commitment from an employer to long-term relationships with its employees sets a foundation for peak employee performance. Incentives can work when implemented correctly, but not if workers are uncertain about the stability of their jobs. Many former Wells Fargo employees reported that managers made it clear if you missed your quota too often, you would lose your job.

“Reward and recognition programs should be anchored in fostering company values and delivering on the brand promise to the recipient,” adds Sean Roark, president of the Incentive Marketing Association (IMA), an umbrella organization for businesses that serve the non-cash incentive marketplace. “It starts with setting clear, measurable, value-creating goals; providing the right tools and training; and consistently measuring both the business results and process results. Consistently communicating these results is essential. If you meet your sales goal, but the process is flawed, you won’t create the employee engagement needed to serve the customer.”

Is money a motivator?

 It was widely reported that many of the 5,300 Wells Fargo employees who were fired were entry-level personal bankers who earned less than $40,000 per year and relied on the bonuses that were tied to hitting sales quotas to subsist on.

A number of those who have studied workplace motivation and the use of incentives have stated over the years that a competitive salary is necessary before any additional incentives are likely to work long term. But once a certain income has been hit, additional money is not always a powerful motivator.

Ariely has conducted numerous studies to determine whether cash or non-cash incentives work better. “We’ve spent years searching for ways to experiment with real employees at their workplaces. We wanted to study bonuses because almost all companies use some type of bonus, yet despite their ubiquity — and the fact that compensation is most businesses’ largest expense — little is known about how effective bonuses really are. Even less is understood about what forms of payment work best,” he writes in “Payoff.”

Ariely reports in his book that he was able to study a group of workers at a semiconductor production facility at Intel. Ariely created four separate groups in which one group of workers was offered cash for reaching a daily manufacturing quota; another was offered the equivalent value in a voucher for a pizza they could enjoy with their families; a third was told if they met or exceeded their goals they would receive a text message from their boss; and a fourth group was offered nothing at all. The incentives were only offered on the first day of the work week. All groups returned to no incentives the rest of the week.

Not surprisingly, a group of HR managers predicted that the group offered cash would be the most motivated on that first day, followed by the pizza voucher, the compliment and then the group that received nothing. True to form on the first day of the study, the three groups offered incentives outperformed the group that was not offered anything. However, the pizza voucher group boosted productivity by 6.7 percent, almost identical to the 6.6 percent boost from the verbal reward. Of the three incentives, cash performed the worst, coming in slightly behind at 4.9 percent.

More interesting to Ariely was the drop-off in performance by workers in each of the groups through the rest of the week. The compliment group’s performance fell over the course of the next several days to nearly mirror the control group that received no incentives. The cash incentive group dropped their performance well below the control group on the second day of the experiment and, though they rebounded slightly the following three days, stayed below the control group’s performance for the full week. The performance of the pizza group fell over the next three days between the monetary bonus condition and the compliment condition.

“Different types of motivations don’t add up in a simple way,” Ariely states. “In particular, adding money to the equation can backfire and make people less driven. We often assume people work for pay, and that more compensation will translate into greater output. These results suggest that there is a lot more to work than merely the opportunity to earn money in exchange for labor.”

“It’s important to remember that incentives and compensa­tion are two different things, and confusing them is what gets organizations in trouble,” agrees IMA President Sean Roark. “Cash is often perceived as compensation rather than an instrument of motivation/appreciation, which is the definition of an incentive. When cash is equivocated with compensation, it becomes something that is due, not a gift given as a message of engagement, appreciation or motivation.”</s>Wells Fargo & Co. chief Timothy Sloan received a terse call last Tuesday from the Federal Reserve and Federal Deposit Insurance Corp.: That afternoon the regulators would publicly announce the bank had flunked a vital test and would be slapped with first-of-their-kind penalties.

The failure of the bank’s so-called living will test, even as four other big banks passed, kicked off the latest crisis for Wells Fargo, which is still reeling from its sales-tactics scandal. And it poses yet another challenge for Mr. Sloan,...
The U.S. Financial Industry Regulatory Authority fines several companies, including Wells Fargo, RBC Capital Markets, and LPL Financial, a combined $14.4 million for record-keeping problems that could have allowed company and customer documents to be altered.