Wells Fargo & Co (NYSE:WFC) is trending after the bank’s board of directors disclosed the findings of the company’s independent investigation into its retail banking sales practices and related matters (Here’s the link to the full 110 report). Wells Fargo’s reputation previously took at hit due to an unauthorized account opening/cross selling scandal, which led to the number of retail accounts opening at the bank to drop sharply. To correct the actions, the bank separated the roles of Chairman and CEO, and clawed back $69 million in compensation from previous CEO John Stumpf and $67 million from executive Carrie Tolstedt. Bulls hope that the claw-backs will help prevent similar types of behavior going forward.
Chairman Stephen Sanger said, “This exhaustive investigation identified serious issues related to Wells Fargo’s decentralized structure and the sales culture of the Community Bank, all of which the Board and management have been working diligently to rectify. In addition to the progress we’ve already made to fix these issues, the Board has taken significant employment actions and executive compensation actions totaling over $180 million. The trust customers, employees and investors place in Wells Fargo is paramount — and our work to rebuild and strengthen those relationships continues in earnest. The Board has total confidence in management, and while this investigation has concluded, our oversight of the Company and commitment to accountability are stronger than ever.”
In other news, Kevin Barker of Piper Jaffray upgraded Wells Fargo & Co (NYSE:WFC) to ‘Neutral’ from ‘Underweight’, noting that much of the account scandal has now been priced in when it comes to Street estimates and valuation metrics. Piper has a $55 price target, up from the previous $52.
What Does The Smart Money Sentiment Say?
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Of the 100 top funds that own shares of Wells Fargo, none are more widely held in esteem than Warren Buffett’s Berkshire Hathaway, which owned around 10% of the bank at the end of December. Buffett is a big believer in the bank and hasn’t changed his position despite the cross selling scandal.
The Bottom Line
Wells Fargo & Co (NYSE:WFC) is in the spotlight after the bank took more actions to put the cross selling scandal behind it. Hopefully, as investors forget about the event, Wells Fargo’s retail activity will pick up again and the bank will go back to growing at an above-average rate. For more reading, check out ‘16 Biggest Commercial Banks In New York City‘.
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