Wells Fargo & Co. (WFC) Accused of Misleading Shareholders
In 2016 and 2017, Wells Fargo engaged in high-profile scandals that involved Company employees opening scores of unauthorized deposit and credit accounts in customers’ names as well as other severe customer abuses. Following these revelations, the Federal Reserve, Consumer Financial Protection Bureau and Office of the Comptroller of the Currency entered into a consent orders with Wells Fargo to ensure the Company ameliorated its oversight and governance failures. Wells Fargo repeatedly touted its reform efforts and assured investors it was complying with its consent orders. Notwithstanding, on March 4, 2020, the U.S. House of Representatives Financial Services Committee issued a report revealing Wells Fargo “continues to struggle to implement effective risk management and remediation programs” and failed to demonstrate it can establish compliance management infrastructure capable of preventing customer abuses. Finally, on March 11, 2020, the Financial Services Committee held a hearing in which Wells Fargo’s former chair of its board of directors indicated Wells Fargo was well aware it was not adequately responding to the consent orders and had not implemented effective risk management procedures. Following these disclosures, Wells Fargo’s share price fell 34% from a closing price of $41.40 per share on March 5, 2020, to a closing price of $27.50 per share on March 12, 2020.
