Warren Buffett Dumps Wells Fargo Stock After Sales Scandal Clawbacks – Reuters Apr 12, 2017

Warren Buffett’s Berkshire Hathaway on Wednesday said it withdrew its application to the Federal Reserve to boost its ownership stake in Wells Fargoabove 10 percent, and is instead selling 9 million shares to keep it below that threshold.

Berkshire Hathaway (BRK.A, -0.27%) said it concluded after several months of talks with Fed officials that “the commitments that would be required of us” to maintain a higher stake “would materially restrict our commercial activity with Wells Fargo.”

It also said “investment or valuation considerations” were not factors in the sale of the 9 million shares, which it began on Monday and expects to complete by early July.

Berkshire is the largest shareholder in San Francisco-based Wells Fargo (WFC, -1.92%), which has been beset by a scandal since September over its creation of unauthorized customer accounts.

The bank on Monday said it would claw back an additional $75 million of compensation from the executives it blamed most, former CEO John Stumpf and former community banking chief Carrie Tolstedt.

Despite the scandal, Wells Fargo shares have, like shares of many banks, rallied in recent months, gaining 16.6 percent since Donald Trump was elected U.S. president in November.

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Wells Fargo Curbs Product Cross-Selling – WSJ

Wells Fargo & Co. has instructed some of its employees to stop cross-selling products to customers, shortly after the bank was hit with a $185 million fine for questionable sales tactics

Wells Fargo & Co. has told some employees to stop cross-selling products to customers, while the Senate Banking Committee’s Republican majority said late Monday it plans a hearing into the bank’s sales practices.

Source: Wells Fargo Curbs Product Cross-Selling – WSJ

Wells Fargo to Be Subject of Enforcement Action Over Cross-Selling, Sales Practices – By EMILY GLAZER Updated Sept. 7, 2016 10:22 p.m. ET

Bank to be sanctioned by currency comptroller, consumer watchdog, L.A. city attorney

Pedestrians pass a Wells Fargo & Co. bank branch in New York.ENLARGE

Pedestrians pass a Wells Fargo & Co. bank branch in New York. Photo: Eric Thayer/Bloomberg News


Emily Glazer

Updated Sept. 7, 2016 10:22 p.m. ET

Wells Fargo & Co., the biggest U.S. bank by market value, is to be the subject of a regulatory enforcement action related to its cross-selling of products and sales tactics, according to people familiar with the matter.

The Office of the Comptroller of the Currency, Consumer Financial Protection Bureau and Los Angeles City Attorney plan to announce the civil action and a related settlement Thursday, the people said. The amount of a fine or remedial actions that may result weren’t immediately clear.

Wells Fargo declined to comment on any discussions with regulators.

Regulators and prosecutors have been investigating whether Wells Fargo pushed employees too hard to meet sales goals while failing to do enough to prevent questionable behavior, The Wall Street Journal has previously reported. In May 2015, the Los Angeles City Attorney filed suit, alleging the bank pressured its employees to commit fraudulent acts, including opening accounts for people that don’t exist.

Bank spokeswoman Mary Eshet previously had said that Wells Fargo disagreed with the allegations in the lawsuit including that it used sales tactics that are too aggressive for its customers.

Wells Fargo, like other banks, has pushed cross-selling of multiple products to its customers to bolster sales and profitability at a time when both have been under pressure from a sluggish economy and superlow interest rates.

Many banks encourage their customers to buy more than one financial product—cross selling—but Wells Fargo has been more upfront about how much it does. Wells Fargo publishes in quarterly reports by division how many products it sells to its customers, on average. Some current and former employees say they have met several times a day with colleagues to discuss sales goals, and many branch employees receive bonuses related to meeting or exceeding goals.

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Regulators Reject ‘Living Wills’ of Five Big U.S. Banks – By Ryan Tracy Updated April 13, 2016 10:48 a.m. ET

Fed, FDIC rebuke bankruptcy plans of J.P. Morgan, Wells Fargo, Bank of America, Bank of New York, State Street

Federal Reserve building in Washington, D.C.

Federal Reserve building in Washington, D.C. Photo: Reuters

WASHINGTON—Regulators ordered five big U.S. banks to make significant revisions to their so-called living wills by Oct. 1 or face potential regulatory sanctions, a stern warning that will fuel criticism the firms are “too big to fail.”

J.P. Morgan Chase & Co., Wells Fargo & Co., Bank of America Corp., Bank of New York Mellon Corp., and State Street Corp. were told by the Federal Reserve and the Federal Deposit Insurance Corp. that the regulators felt their plans for a possible bankruptcy don’t meet the legal standard laid out in the 2010 Dodd-Frank law, which requires that firms have credible plans to go through bankruptcy at no cost to taxpayers

They said those firms had until October to present plans regulators find acceptable, or the agencies or regulators could impose higher capital requirements, restrictions on growth or activities, or other sanctions.

Bank stocks, however, rallied in recent trading, led by J.P. Morgan, which reported smaller-than-expected declines in earnings and revenue for the first quarter despite difficult trading conditions.

The regulators split in their assessments of Goldman Sachs Group Inc. and Morgan Stanley. The FDIC said that Goldman Sachs’s plan didn’t meet the legal standard, while the Fed didn’t give that negative assessment.

The two regulators took the opposite stance on Morgan Stanley. The Fed “identified a deficiency” in Morgan Stanley’s plan that it said didn’t meet the legal standard, but the FDIC didn’t go that far, the agencies said in a news release.

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University of California drops prison investments amid student demands – (Reporting by Curtis Skinner in San Francisco; Editing by Leslie Adler) Fri Dec 18, 2015 9:16pm EST

The University of California system said on Friday it will drop its roughly $30 million worth of investments in private prison companies following demands from a black student group.

The decision comes amid a wave of student protests against racism at college campuses across the country as well as the Black Lives Matter civil rights movement against the U.S. criminal justice system, which disproportionately impacts black people.

The UC system’s chief investment officer, Jagdeep Singh Bachher, made the decision after meeting with students of the Afrikan Black Coalition, university spokeswoman Dianne Klein said.

Klein said the UC system has a policy against “blanket divestment,” but made the decision after further review.

“This made sense given our conclusion that, based on risk over the next several years, these holdings were not a good investment for a long-term investor such as UC,” Klein said.

Klein said the amount invested was less than $30 million, a tiny fraction of the UC system’s $100 billion investment portfolio. Klein said she did not know exactly which private prison companies the system held shares in or exactly how much money was invested.

The coalition, a California-wide student group, said the UC system had $25 million invested in Corrections Corporation of America and The Geo Group.

Corrections Corporation spokesman Jonathan Burns said: “Frankly, we’re delighted to have a greater share of investors who are thoughtful about our business, can tell the difference between rhetoric and reality, and agree that the free market is a great creator of innovation and economic opportunity.”

The Geo Group could not be immediately reached for comment.

The student union also called on the UC system to divest some $425 million of investments in Wells Fargo & Co, which it said is a large investor in private prison firms and has been accused in courts across the country of practicing predatory lending against minorities.

Klein said the UC system has no plans to drop its Wells Fargo investments.

In July, Wells Fargo won a dismissal of lawsuits in Chicago and Los Angeles that alleged it violated the federal Fair Housing Act. The California city of Oakland filed its own lawsuit against the company in September.

(Reporting by Curtis Skinner in San Francisco; Editing by Leslie Adler)