Wells Fargo & Company Class Action Lawsuit
- Company Name
- Wells Fargo & Company
- Stock Symbol
- Class Period
- April 5, 2020 to May 5, 2020
- Northern District of California
The Wells Fargo & Company class action lawsuit charges Wells Fargo and certain of its officers with violations of the Securities Exchange Act of 1934 and seeks to represent purchasers of Wells Fargo’s securities between April 5, 2020 and May 5, 2020, inclusive (the “Class Period”). The Wells Fargo class action lawsuit was commenced on June 4, 2020 in the Northern District of California and is captioned Ma v. Wells Fargo & Company, No. 20-cv-03697.
Wells Fargo is a diversified financial services company that provides banking, investment, mortgage, and consumer and commercial finance products and services to individuals, businesses, and institutions in the United States and internationally.
The Wells Fargo class action lawsuit alleges that defendants made false and/or misleading statements and/or failed to disclose that: (i) Wells Fargo planned to, and did, improperly allocate government-backed loans under the Paycheck Protection Program (“PPP”) and/or had inadequate controls in place to prevent such misallocation; (ii) the foregoing foreseeably increased Wells Fargo’s litigation risk with respect to PPP allocation as well as the risk of regulatory scrutiny and/or potential enforcement actions; and (iii) as a result, Wells Fargo’s public statements were materially false and misleading at all relevant times.
On April 19, 2020, reports emerged that Wells Fargo may have unfairly allocated government-backed loans under the PPP. For example, USA Today reported that a “lawsuit filed on behalf of small business owners . . . alleges that Wells Fargo unfairly prioritized businesses seeking large loan amounts, while the government’s small business agency has said that PPP loan applications would be processed on a first-come, first-served basis.” According to the lawsuit, “[t]he move by Wells Fargo meant that the bank would receive millions more dollars in processing fees.” On this news, the price of Wells Fargo stock fell more than 5% over two trading days to close at $26.84 per share on April 21, 2020.
Then, on May 5, 2020, Wells Fargo filed a quarterly report on Form 10-Q with the U.S. Securities and Exchange Commission disclosing that, in addition to multiple PPP-related lawsuits that had been initiated against Wells Fargo, Wells Fargo had “received formal and informal inquiries from federal and state governmental agencies regarding its offering of PPP loans.” On this news, the price of Wells Fargo stock declined by more than 6% over two trading days, falling to a close of $25.61 per share on May 6, 2020.
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