Current Events > Wells Fargo: Shareholders can't sue us because they should know we are lying.

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https://www.mpamag.com/news/wells-fargo-shareholders-cant-sue-us-because-they-should-have-known-we-were-lying-116073.aspx

Wells Fargo is adopting an unusual defense against a shareholder lawsuit: claiming, essentially, that shareholders cant hold the bank accountable for CEO Tim Sloans statements that it was working to restore trust and be more transparent about its scandals because it should have been obvious that Sloan was lying.

The defense, which Wells Fargo put forth in a legal filing aimed at getting a shareholder lawsuit dismissed, relies on the legal concept of puffery, according to a Los Angeles Times report.

Generally, businesses engage in puffery when they make advertising claims that are vague or transparently untrue a restaurant claiming it has the worlds best burgers, for instance. Judges and regulators have ruled that claims like that are so obviously inflated that consumers wont take them seriously. Such claims arent actionable in court, the Times reported.

The thing is, puffery usually applies to outsized advertising claims. Wells Fargo is now claiming that the puffery defense should be applied to statements CEO Tim Sloan made to investors, and that a lawsuit filed by shareholders should be dismissed on those grounds.

The lawsuit stems from one of the banks many scandals in particular the July 2017 revelation that Wells Fargo had for years been charging auto loan customers for unnecessary insurance. The lawsuit is seeking class certification for all investors who bought the companys stock after Nov. 3, 2016, through Aug. 3, 2018, the Times reported.

It was on Nov. 3, 2016, that Sloan announced at an investors conference that he was not aware of any undisclosed scandals. In fact, Wells Fargo already knew that its improper auto insurance charges had pushed as many as 275,000 customers into delinquency and resulted in 25,000 improper repossessions. In fact, top bank executives allegedly knew of the problem as early as 2012, but took no action until 2016, according to the Times. Regulators have already slammed the bank for its inaction; earlier this year, the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency fined Wells Fargo $1 billion for the auto-insurance scandal and a rash of improper mortgage fees.

The shareholder lawsuit focuses on efforts by Sloan and other Wells Fargo executives to conceal the auto-loan scandal, the Times reported. Wells Fargo execs were, at the time, already dealing with the banks massive fake-accounts scandal. They insisted that Wells Fargo would be more transparent about its scandals even while failing to disclose the auto-insurance issue.

During an investor call in January 2017, Sloan said that the bank wanted to leave no stone unturned. If we find something thats important, well communicate that.

By that time, Sloan had already received an independent report on the auto-insurance scandal, the Times reported. The scandal did not become public, however, until the independent report was leaked to the media in July 2017.

The shareholder lawsuit contends that Wells Fargo lied about its intent to be transparency. Wells Fargo, however, maintains that Sloans statements were puffery. According to the banks legal filing, Sloans comments were generic statements on which no reasonable investor could rely.

This is just another example of corporate actors making statements to the market, and then trying to avoid liability for the representations they made, Darren Robbins, the attorney bringing the shareholder suit, told the Times.

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And this is way I don't bank with them
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This is the worst defense ever.
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I'm so glad I dropped their stock. Shit has been stuck in low 50s forever.
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Still the best giant bank I've ever done business with. Of course, these scandals are only a part of about .001% of the company's entire operation, so odds are that myself and most everyone else aren't going to have any issues with them.

Bishop9800 posted...

And this is way I don't bank with them

To be fair, you aint gonna find much better alternatives unless you bank with a credit union or something
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EA and activision will be using this soon if it works.
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HenryAllbright posted...

Still the best giant bank I've ever done business with. Of course, these scandals are only a part of about .001% of the company's entire operation, so odds are that myself and most everyone else aren't going to have any issues with them.

Look, my racially offensive statements are only .001% of the things i say. Dont worry about em.
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Ex-Kefiroth posted...

Did WF ever face any actual punishment for their fucking over their customers? Or will it take action from angry rich shareholders before they're reined in?

Not that I know of.
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Ex-Kefiroth posted...

Did WF ever face any actual punishment for their fucking over their customers? Or will it take action from angry rich shareholders before they're reined in?

They've been heavily fined for every instance. That's why I don't believe that banks have some sort of incentive to be negligent or dirty. It never pays off.

VandorLee posted...

HenryAllbright posted...

Still the best giant bank I've ever done business with. Of course, these scandals are only a part of about .001% of the company's entire operation, so odds are that myself and most everyone else aren't going to have any issues with them.

Look, my racially offensive statements are only .001% of the things i say. Dont worry about em.

I didn't say don't worry about them. I'm saying have some perspective. Seems like a lot of people are willing to judge a company based on reading a few articles in the media, which is probably not the best practice.

Ex-Kefiroth posted...

HenryAllbright posted...

Ex-Kefiroth posted...

Did WF ever face any actual punishment for their fucking over their customers? Or will it take action from angry rich shareholders before they're reined in?

They've been heavily fined for every instance. That's why I don't believe that banks have some sort of incentive to be negligent or dirty. It never pays off.

Were the fines more than what WF made from their acts of malfeasance? I know in theses type of cases they very often are not.

Any revenues that banks make as a result of these types of issues is refunded back to the customers. So I'm sure they definitely lost money.

VandorLee posted...

This is the worst defense ever.

Wells Fargo should be shut down and every penny of their wealth that isn't an account holder's should be redistributed.

They have failed time and time again and have had little in the way of consequences.
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WF needs to figure something out, for sure. Even if it is only a tiny fraction of their operations, there is little tolerance for it.

If the tale is tall, you make a withdrawal.
- Johnny Cochran
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thats one slippery slope
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