Wells Fargo & Company
- Company Name
- Wells Fargo & Company
- Stock Symbol
- Class Period
- January 13, 2017 to July 27, 2017
- Motion Deadline
- April 15, 2018
The complaint charges Wells Fargo and certain of its officers with violations of the Securities Exchange Act of 1934. Wells Fargo is a diversified financial services company providing banking, insurance, investments, mortgage, leasing, credit cards and consumer finance. The Company operates through physical stores, the internet and other distribution channels worldwide.
On September 8, 2016, the U.S. Consumer Financial Protection Bureau published a Consent Order with a Stipulation to its entry signed by Mary Mack, Executive Vice President of Wells Fargo Bank, imposing a fine of more than $185 million on the Company. The Consent Order detailed fraudulent practices at the Company centered on a corporate culture intent on growing its cross-selling opportunities and unlawfully and without its customers' consent opening millions of unauthorized deposit and credit card accounts.
The complaint alleges that throughout the Class Period, defendants made materially false and misleading statements and/or failed to disclose adverse information regarding Wells Fargo’s business and operations, including that Wells Fargo had charged more than 800,000 customers for unneeded auto insurance, the expense of which pushed approximately 274,000 Wells Fargo customers into delinquency and resulted in almost 25,000 vehicle repossessions, and that this conduct, when it came to light, would foreseeably subject Wells Fargo to heightened regulatory scrutiny and/or enforcement actions. As a result of this undisclosed conduct, the price of Wells Fargo shares was artificially inflated, reaching a high of nearly $60 per share during the Class Period.
On July 27, 2017, after the market closed, The New York Times published an article entitled "Wells Fargo Forced Unwanted Auto Insurance on Borrowers." Citing an internal report prepared for Wells Fargo's executives, the article reported that "[m]ore than 800,000 people who took out car loans from Wells Fargo were charged for auto insurance they did not need," that "[t]he expense of the unneeded insurance . . . pushed roughly 274,000 Wells Fargo customers into delinquency and resulted in almost 25,000 wrongful vehicle repossessions," and "that the bank owed $73 million to wronged customers." Following publication of this article, Wells Fargo's share price fell $1.41 per share, or more than 2.5%, to close at $53.30 per share on July 28, 2017.