It’s a Wall Street club that’s virtually unknown on Wall Street. It has no name or official membership list, and it meets only once a year, in locations such as Switzerland’s Lake Lucerne, Connecticut’s Litchfield County, and, this year, Versailles.
The attendees are top in-house lawyers for some of the world’s most powerful banks — people who sit at the table for decisions that can shape multibillion-dollar litigation tabs for the likes of Barclays Plc, Citigroup Inc., Goldman Sachs Group Inc., Deutsche Bank AG and JPMorgan Chase & Co.
Former Wells Fargo Chairman and CEO John Stumpf sold $61 million worth of Wells Fargo (WFC) shares in the month prior to settling a long-running investigation that charged the bank with falsifying millions of customer accounts to boost sales and fees.
The following month, when regulators announced on Sept. 8 that they’d fined Wells Fargo $185 million for falsifying more than 2 million customer accounts to meet aggressive sales goals, the company’s stock price plunged and Stumpf was called on the carpet before Congress before finally resigning this week.
Stumpf pocketed $26 million in proceeds from that August sale — the shares in question were “incentive stock options” purchased at a discount to Wells Fargo’s current market price and then immediately sold at a profit — reflecting a small piece of the rich incentive pay that Stumpf collected during his tenure at the top of the bank.
However, the sale also raises a red flag of potential violation of insider trading rules that prohibit company insiders from profiting on stock purchases and sales based on unpublished corporate information, said Chicago securities lawyer Andrew Stoltmann.
“At minimum, the optics are horrific for Stumpf and for Wells Fargo,” Stoltmann said. “I would be shocked if the Securities and Excgange Commission doesn’t look heavily into this.”
One-time Republican presidential candidate and current governor of Ohio, John Kasich, announced Friday that he is using his power as governor to bar Wells Fargo from participating in future state debt offerings and financial services contracts initiated by state agencies for one year.
Additionally, Kasich said that he will seek to exclude Wells Fargo from participating in debt offerings initiated by the Ohio Public Facilities Commission.
Kasich’s office notes that Kasich is one of six votes on the OPFC. The remaining members are Ohio’s attorney general, auditor of state, secretary of state, treasurer of state and the director of the office of budget and management.
“It’s clear that Wells Fargo’s culture was compromised by greed and by a desire to make money that was stronger than a commitment to following proper ethical standards,” Kasich said.
In the eyes of Sen. Elizabeth Warren, D-Mass, the chair of the Securities and Exchange Commission has not done nearly enough to prevent the “flood” of money flowing from corporations into the election process and has repeatedly “undermined” the SEC’s mission to protect investors, and therefore needs to replaced immediately.
Warren sent a letter Friday to President Obama, calling on him to replace Mary Jo White as the chair of the SEC due to her “refusal” to develop a political spending disclosure rule and her efforts to permit publically traded companies to disclose less to investors and the public.
“Corporations are flooding our elections with millions of dollars in secret political contributions, drowning out the voices of working families. Yet two weeks ago, Republican leaders successfully forced a rider into must-pass legislation to fund our government that prohibited the Securities and Exchange Commission from issuing a final rule requiring public companies to disclose these political contributions,” Warren writes.
Defendants have filed their Reply in support of their Motion to Dismiss:
Download Document # 49 here:
|October 14, 2016
||49 Defendants’ Reply In Support Of Motion to Dismiss Plaintiffs’ First Amended Complaint