LOS ANGELES--(BUSINESS WIRE)--The Law Offices of Frank R. Cruz announces that a class action lawsuit has been filed on behalf of persons and entities that purchased or otherwise acquired Wells Fargo & Company (“Wells Fargo” or the “Company”) (NYSE: WFC) securities between October 13, 2017 and October 13, 2020, inclusive (the “Class Period”). Wells Fargo investors have until December 29, 2020 to file a lead plaintiff motion.
If you are a shareholder who suffered a loss, click here to participate.
On April 14, 2020, Wells Fargo announced its first quarter 2020 financial results in a press release. Therein, the Company announced a $4 billion provision expense to account for expected credit delinquencies, including $940 million in net charge-offs on loans and debt securities and a $3.1 billion reserve build.
On this news, the Company’s stock price fell $4.54, or 14%, over three consecutive trading sessions to close at $26.89 per share on April 16, 2020.
On May 5, 2020, Wells Fargo filed its quarterly report with the SEC for first quarter 2020, in which it stated that Wells Fargo’s collateralized loan obligations (“CLOs”) investments fell 9% and that the Company suffered $1.7 billion in unrealized losses on its CLO investments during the quarter.
On this news, the Company’s stock price fell $1.74, or 6%, over two consecutive trading sessions to close at $25.61 per share on May 6, 2020.
On June 10, 2020, Wells Fargo’s Chief Financial Officer, John Shrewsberry, presented at the Morgan Stanley Virtual US Financials Conference, during which he stated that the second quarter reserve build would be even “bigger than the first quarter” due to continued deterioration in the Company’s credit portfolio.
On this news, the Company’s stock price fell $5.84, or 18%, over two consecutive trading sessions to close at $26.79 per share on June 11, 2020.
On July 14, 2020, Wells Fargo announced its second quarter 2020 financial results in a press release, disclosing a $9.5 billion provision expense to account for expected credit delinquencies.
On this news, the Company’s stock price fell $1.16, or 5%, to close at $24.25 per share on July 14, 2020.
On October 14, 2020, Wells Fargo announced a $769 million provision expense for third quarter 2020, but the Company’s CFO stated that further deterioration of the credit portfolio had been forestalled due to short-term customer accommodations provided since the start of the pandemic.
On this news, the Company’s stock price fell $1.49, or 6%, to close at $23.25 per share on October 14, 2020.
The complaint filed alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors that: (1) while issuing billions of dollars’ worth of commercial loans, the Company consistently failed to follow appropriate underwriting standards and due diligence guidelines, including inflating the net income and future expected cash flows of its commercial clients to justify issuing excessive loan amounts; (2) a materially higher proportion of its commercial loans were to customers of poor credit quality and/or at a substantially higher risk of default than disclosed to investors; (3) the Company had failed to timely write down commercial loans, CLOs and CMBS on its books that had suffered impairments; (4) the Company had materially understated the reserves needed for expected credit losses in its commercial portfolios; (5) the Company had systematically misrepresented the credit quality and likelihood of default of the loans it packaged and securitized into CLOs and CMBS; (6) the CLO and CMBS-related loans issued and investment securities held by the Company were of lower credit quality and worth far less than represented to investors; (7) as a result of the above, the Company’s statements regarding the credit quality of its commercial loans, its underwriting and due diligence practices, and the value of its CLO and CMBS books were materially false and misleading; and (8) as a result of the above, the Company was exposed to severe undisclosed risks of financial, reputational and legal harm, in particular in the event of significant and sustained stress in the commercial credit markets; and (4) as a result, Defendants' statements about its business, operations, and prospects, were materially false and misleading and/or lacked a reasonable basis at all relevant times.
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If you purchased Wells Fargo securities during the Class Period, you may move the Court no later than December 29, 2020 to ask the Court to appoint you as lead plaintiff. To be a member of the Class you need not take any action at this time; you may retain counsel of your choice or take no action and remain an absent member of the Class. If you purchased Wells Fargo securities, have information or would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Frank R. Cruz, of The Law Offices of Frank R. Cruz, 1999 Avenue of the Stars, Suite 1100, Los Angeles, California 90067 at 310-914-5007, by email to info@frankcruzlaw.com, or visit our website at www.frankcruzlaw.com. If you inquire by email please include your mailing address, telephone number, and number of shares purchased.
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