Wells Fargo & Company
Lead Plaintiff Deadline: 12/29/2020
SUMMARY OF CASE:
A securities class action has been filed against Wells Fargo & Company (WFC) on behalf of all purchasers of Wells Fargo common stock during the period between October 13, 2017 through October 13, 2020. This case has been filed in the USDC – N.D.CA.
The complaint alleges that during the Class Period, defendants made false and misleading statements and/or failed to disclose adverse information regarding Wells Fargo’s business and operations. Specifically, during the Class Period, defendants reassured investors that Wells Fargo’s commercial credit portfolios were of exceptional credit quality and the product of robust, industry-leading underwriting and due diligence policies and procedures. In truth, however, Wells Fargo fueled its rapid commercial loan growth by lending to businesses that posed a heightened risk of default. Wells Fargo systematically concealed these credit risks by artificially inflating the incomes generated by borrowing businesses, relaxing or failing to follow applicable underwriting procedures, and circumventing applicable risk controls. Wells Fargo exacerbated the threat posed by its defective commercial debt by packaging the loans into CLOs and CMBS and widely distributing these securitized products throughout the financial system.
On April 14, 2020, in connection with the release of its first quarter 2020 financial results, Wells Fargo revealed it was taking a massive $4 billion provision expense to account for expected credit delinquencies. On this news, the price of Wells Fargo stock fell 14% over three trading days. On July 14, 2020, Wells Fargo released its second quarter 2020 results, which disclosed that the Company had suffered a $2.4 billion loss during the quarter, or ($0.66) per share, and was taking a $9.5 billion provision expense to account for expected credit delinquencies. On this news, the price of Wells Fargo stock fell 5% to $24.25 per share.
Then, on October 14, 2020, Wells Fargo released its third quarter 2020 results, with the Company announcing that it had recognized another provision expense of $769 million and that non-accrual loans had increased $2.5 billion, or 45%, to $8 billion during the quarter. The price of Wells Fargo stock fell 6% on this news to close at $23.25 per share on October 14, 2020.