By Rishi Shah,
Money and Investing Writer
Wells Fargo has been through a rough past few months amidst the fake account scandal. Last year the company was forced to fire many employees related to this scandal and even to pay millions of dollars in fines. To gain back consumer trust, they fired the CEO, John Stumpf, and hired Tim Sloan to take his place. CNBC reported, “Sloan took over for John Stumpf, who left his role amid a cross-selling scandal that the bank has tried to put behind it this year by clawing back money paid to past executives, including Stumpf.”
According to CNN, “Wells Fargo confirmed to CNNMoney that it had fired 5,300 employees over the last few years related to the shady behavior.” This staggering claim only adds to the fire of this scandal, as over 1.5 million deposit accounts have not been authorized by consumers. These claims are shocking as the number of factors cast a shady light on the company.
In terms of the stock, the company is down to around $53 dollars from the high of almost $58 a share in 2015. This is not at all bad considering that the company has been faced with numerous allegations throughout the scandal. Seekingalpha reported, “Wells Fargo (NYSE:WFC) has long been considered the safest big banking stock you could own and for good reason. Its historically conservative banking culture allowed it to consistently deliver solid profits even during periodic financial crises that wiped out many of its competitors.”
Considering that this is known to be one of the safest banks to invest in, Wells Fargo has a lot of building up to do. Mainly to recover from the scandal, but also to be set back on their long term growth plans.
It has been reported by fortune that “Berkshire Hathaway, (NYSE: BRK-A) (NYSE: BRK-B) the conglomerate run by billionaire investor Warren Buffett announced that it’s selling around 9 million shares of Wells Fargo”. This is huge number of shares and made the stock tumble for a few hours as buyers started losing hope in its value. When such a massive company dumps a stock, the consumer sentiment towards it falls as well.
The CEO Tim Sloan and Chairman Stephen Sanger took matters into their own hands this week and together bought over 100,000 shares of the company’s stock. A staggering amount considering shares are a little over $50 apiece!
This number is minuscule considering the scale at which Berkshire Hathaway dropped their shares and how much of a frenzy consumers were in.
According to Reuters, “Sanger, who led an internal inquiry after the third-largest U.S. bank said it had opened as many as two million unauthorized customer accounts, acquired 58,342 shares, according to a regulatory filing on Monday” and “Sloan, who became CEO after the scandal led to the resignation of his predecessor, John Stumpf, bought 39,000 shares.” This purchase proves that these executives have faith in the future of their company.
Compared to other scandals, Wells Fargo has not paid nearly as much back in damages.
Although this scandal is huge, their millions do not match the billions other major banks and corporations have compensated consumers in the past.
This move by the CEO shows that he trusts the company and has a positive outlook for the future of Wells Fargo.
A version of this article appeared in the Tuesday, April 25th, 2017 print edition.
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