Fake Metrics To Fake Accounts: 2016's Big Corporate Scandals

Just as the 2016 had several positives to write home about, it was also marred by some scandals that shook the faith of investors. The markets, however, came unscathed, as reflected by the strong gains recorded by the major averages for the year. Even some of these companies mired in controversies managed to eke out decent gains.

Though the adage ‘to err is human' could vindicate an individual, corporate scandals are too big and have far-reaching implications for stakeholders to be dismissed off as aberrations. Some of these scandals compromise the privacy, security and even life of individuals.

Here is a look at some scandals that rocked the corporate world in 2016.

1. Facebook Spills the Bean on Fake Metrics

Facebook Inc FB was embroiled in a controversy over fake metrics this year, alienating marketers and big ad buyers. The company disclosed in a post on its Advertiser Help Center in late September, it had erroneously calculated one of its video metrics, taking into account the number of views of a video only when it was watched for three or more seconds. This resulted in overstating of the metric.

Ahead of this disclosure, the company said it had fixed an error it discovered in the way it calculates one of its video metrics and had notified its partners, who use it to assess their video campaigns. The company said then it had renamed the metric to make it clearer.

In another update released on November 16, Facebook revealed more anomalies uncovered through a comprehensive internal metrics audit. The anomalies included the weekly and monthly reach of marketers' posts, the number of full video views and time spent on publishers' Instant Articles.

Advertisers felt they had been short changed, as the fake metrics impacted their ad spending decisions, including avenues and budgets. Facebook announced a slew of measures, including allowing third party verification, for addressing the issue.

The company's stock was up 11 percent in the year-to-date period.

2. Drive That Turned Fatal

Tesla Motors Inc TSLA courted controversy when in June when its Model S car with the Autopilot system activated was involved in a fatal crash. The company notified the crash to the National Highway Traffic Safety Administration.

The vehicle cruising through a divided highway came under the tractor trailer, which was moving perpendicular to the Model S. The windshield of the Model S was impacted, with the top of the Model S torn off by the force of the collision, killing the driver behind the wheel.

Tesla was down over 10 percent in the year-to-date period.

3. Fire Hazard Engulfs Samsung

Smartphone maker SAMSUNG ELECTRONIC SSNLF faced a setback this year, as it was forced to recall its flagship Galaxy Note 7, which hit sales on August 19, following reports of catching fire. Even with the replacements catching fire, the South Korean electronics giants had no other recourse but to recommend owners stop using the phones and returning these. Subsequently, the Note 7 was permanently discontinued world over.

Promptly, the company's results reflected the hit, as it reported a 16.5 percent drop in its third quarter profits. Operating profit at its mobile division fell 96 percent. Analysts blame the company's thrust on rolling out the product ahead of rival Apple Inc. AAPL iPhone 7 for the predicament, as it didn't get enough time for adequate testing.

4. Wells Fargo's Customer Account Scam

Wells Fargo & Co's WFC sales team was driven into opening fake accounts without the volition of customers just to meet the overambitious sales targets. Subsequently, the company managed to negotiate a $185 million settlement agreement with the Consumer Financial Protection Bureau (CFPB), the Office of the Comptroller of the Currency (OCC) and the city of Los Angeles. The settlement came in response to charges of fraudulent acts, including opening unauthorized accounts and charging customers unjustified fees.

Chairman and CEO John Stumpf resigned in the wake of the scandal, leaving the reign in the hands of COO Timothy Sloan.