By Pam Martens and Russ Martens: September 28, 2016
On September 22, 2016 eight Senate Democrats, including Elizabeth Warren, Bernie Sanders, Jeff Merkley and Sherrod Brown, wrote to the Department of Labor requesting an investigation of the banking behemoth, Wells Fargo, to determine if it violated labor laws. The letter came amidst the public outcry over news that Wells Fargo’s employees had opened as many as 2 million customer accounts without authorization in order to meet stringent sales quotas for cross-selling products. The Senators wrote in the letter:
“…dozens of former and current Wells Fargo employees have come forward to describe the lengths they went to in order to meet the bank’s aggressive sales quotas. When quotas weren’t met, employees faced threats of termination; mandated hours of unpaid overtime; harassment; and other forms of retaliation. For years Wells Fargo employees have described a management culture characterized by ‘mental abuse,’ being forced to work overtime ‘for what felt like after-school detention’ during the week and on weekends, and being ‘severely chastised and embarrassed in front of 60-plus managers.’ ”
Unfortunately, the Senators demonstrate their naiveté about Wall Street’s longstanding and systemic abuse of its workers when they suggest that Wells Fargo has done something uniquely evil to its employees. The Senators write that “Wells Fargo stands out” because it denied overtime pay to its workers dating back as far as 1999.
In reality, cheating low-wage workers out of overtime pay is de rigueur among the biggest banks on Wall Street, as a long series of lawsuits have made clear. As recently as 2014 the serially charged JPMorgan Chase settled a class action lawsuit for $12 million which alleged that its bank tellers and other employees in 12 states were forced to work off the clock for part of their workday with managers actually altering their time cards to reduce JPMorgan’s labor costs. In the same year, Wall Street powerhouse Morgan Stanley settled on the cheap for $4.2 million over allegations it failed to pay its low-wage sales assistants their overtime pay. Eight years earlier, Morgan Stanley settled a lawsuit brought by its California brokers and broker trainees for $42.5 million for failure to pay legally required overtime pay.
Does anyone really believe that an industry that has prided itself on fleecing its customers is not going to go the extra mile to loot its low-wage workers? When it comes to overtime pay abuses, the slogan the Wall Street trader used in rigging the foreign exchange market also prevails across Wall Street: “if you ain’t cheating, you ain’t trying.”
When it comes to abuse of workers on Wall Street, the U.S. Senate needs to take the big picture approach, rather than looking at Wells Fargo in isolation. Overtime pay actually ranks far down the list of serious worker abuses on Wall Street; many practices actually border on mental cruelty and mob-like retaliation with well-documented cases stretching from the 1990s to present day.
On June 9, 1994, Wall Street Journal reporter Margaret Jacobs wrote an in-depth article that captured the inhumane treatment of female sales assistants across Wall Street. The article explained how Helen Walters’ boss, during the workday, called her a ‘hooker,’ a ‘bitch’ and a ‘streetwalker.’ At other times he brandished a riding crop in front of her and once he left condoms on her desk. Despite Walters’ boss admitting to all of those claims, she lost her case because employees are forced to try such cases in Wall Street’s rigged private justice system known as mandatory arbitration. This private justice system is imposed on both employees of the Wall Street firms and their customers, allowing Wall Street to keep its dirtiest secrets shrouded from the sunshine of public courtrooms. Only since the passage of the Dodd-Frank legislation in 2010 are whistleblowers exempt from this system.
But whistleblowers can be targeted in myriad other ways by the tyranny that exists on Wall Street. Just ask Johnny Burris. According to an article in the New York Times last year, JPMorgan Chase drafted bogus customer complaint letters against Burris after he blew the whistle on the bank’s efforts to force its brokers to sell the bank’s proprietary mutual funds rather than funds that might be more suitable for the client. That’s a gravely serious abuse of the customer’s trust as well as a serious abuse of a worker, his career and his reputation. This month, in an Orwellian twist to the story, Wall Street’s crony self-regulator, Finra, has filed a new case involving Burris. Rather than going after JPMorgan for forging customer complaints, Finra is going after Burris over a $624 customer loss.
Ruining the lives and careers of employees who pose a public relations problem has been honed to an art form by the biggest firms on Wall Street, as demonstrated by the Christian Curry case. This is how Wall Street On Parade previously reported on that matter:
“Curry was a 6’2, good looking black male from an upstanding family in Westchester. His father was a prominent surgeon. During a brief pursuit of a modeling career, Curry allowed a fashion photographer to photograph him nude and foolishly signed a release. In 1997 Curry joined Morgan Stanley (then known as Morgan Stanley Dean Witter) as an analyst in the firm’s real estate finance department.
“Approximately nine months after Curry began his Morgan Stanley career, the photos made their way to a gay porn magazine, Playguy, with a smiling Curry emerging on the cover in a provocative pose and an 8-page photo spread inside. Curry, who said he was not gay and, indeed, had a girlfriend, was fired in short order by Morgan Stanley. The firm said he padded his expense account. Curry denied it.
“As the media was having a field day with the case, Morgan Stanley’s legal department surreptitiously wired $10,000 to a numbered account for the benefit of one Charles Luethke, then buried the payment under an accounting code for a lawsuit settlement of an unrelated matter. Luethke had set up a sting operation against Curry, involving him in a plan to plant racist emails on Morgan Stanley’s computers, ostensibly to bolster a race discrimination lawsuit by Curry.
“When the Manhattan District Attorney issued two grand jury subpoenas to Morgan Stanley, the firm was not forthcoming about the $10,000 payment, leading to the very real possibility that criminal charges could have been successfully brought. Why charges were never brought is still a mystery to many on Wall Street. Morgan Stanley settled Curry’s lawsuit, paying $1 million to the Urban League and publicly stating it paid nothing to Curry. Doubts on that issue abound.
“Luethke alleged that Morgan Stanley colluded with police to entrap Curry, offered NYPD officers jobs if they cooperated in the sting operation and said that Phil Purcell, the firm’s Chairman and CEO at the time, was directly involved in the operation. Purcell denied involvement.”
In recent years there have been an unprecedented rash of deaths and suicides among young workers on Wall Street. (See related articles below.) Last year the New York Times, in an epic headline understatement, chocked this off to Wall Street’s “grueling pace.” William D. Cohan of the Times wrote:
“But Mr. Hughes [a 29-year old investment banker who took his life in May 2015] died at a time when sensitivities about the pressures of Wall Street on young professionals are acute. Just a month earlier, Sarvshreshth Gupta, a 22-year-old first-year banking analyst at Goldman Sachs in San Francisco, committed suicide after a particularly stressful stretch at work. Around that time, another Goldman first-year analyst in the health care group who had worked 72 hours straight was hospitalized after having a seizure. (Goldman declined to comment about either episode.) Two years before, Moritz Erhardt, a 21-year-old investment banking intern at Bank of America Merrill Lynch, died after having an epileptic seizure while he was taking a shower to prepare to return to the office after working the previous 72 hours without sleeping. Wall Street has always been a very demanding place to work, but these episodes, whether related to overwork or not, seem to have crystallized a larger need for change.”
And, finally, there is the grotesque and ghoulish reality that the largest Wall Street banks are actually boosting their own profits when their employees die young. Called Bank Owned Life Insurance (BOLI), Wall Street banks are allowed to take out tens of billions of dollars in life insurance policies on their workers, even non executives, and book the life insurance proceeds as tax-free income when the worker dies. The corporation is the named beneficiary on these policies, not the family.
After a series of articles at Wall Street on Parade on a bizarre string of deaths and suicides by young workers in their 30s at JPMorgan Chase, on March 21, 2014 we filed a Freedom of Information Act Request with the Federal banking regulator, the Office of the Comptroller of the Currency, seeking the following:
The number of deaths from 2008 through March 21, 2014 on which JPMorgan Chase collected death benefits; the total face amount of BOLI life insurance in force at JPMorgan; the total number of former and current employees of JPMorgan Chase who are insured under these policies; any peer studies showing the same data comparing JPMorgan Chase with Bank of America, Wells Fargo and Citigroup.
The OCC denied us even a shred of information, writing that the information was being withheld because it was “privileged or contains trade secrets, or commercial or financial information, furnished in confidence, that relates to the business, personal, or financial affairs of any person,” or relate to “a record contained in or related to an examination.” Keeping Wall Street’s darkest secrets is now an operational model at Federal regulators like the OCC, SEC, and Federal Reserve. (See OCC Response to Wall Street On Parade’s Request for Banker Death Information).
If Senators Warren, Sanders, Merkley and Brown genuinely want to change their party’s jaded image as Wall Street Democrats, they will use this timely opportunity to demand that the OCC turn over its records on the profits flowing to Wall Street from these untimely deaths of young people and the size of these life insurance policies on non-executive workers and ask the DOL to dramatically broaden its investigation of worker abuses beyond Wells Fargo to include JPMorgan Chase, Citigroup, Morgan Stanley, Bank of America and Goldman Sachs where there is a long history of smoking guns.