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How Much Did Warren Buffett Lose on the Wells Fargo Scam?
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Warren Buffett has lost nearly $1.6 billion since the announcement of the regulatory fine on Wells Fargo & Company (WFC - Free Report) for its illegal sales practices, which saw its shares drop by 6.8%.
Buffett – the world’s fourth richest man with a personal wealth of $65.8 billion – has long boasted about the safety and surety of Wells Fargo. However, he saw his net worth drop significantly, as his holding company Berkshire Hathaway Inc. (BRK.B - Free Report) owns a 9.5% stake in Wells Fargo. Further, Berkshire declined 2.7% with the revelations about the bank’s massive fraud scandal.
Since last week, Wells Fargo has been facing tough times as the regulatory authorities entered into a $190-million-settlement agreement with the bank. The banking giant has been slapped with charges of illegally opening 1.5 million unauthorized accounts to meet their aggressive internal sales goals. Nonetheless, these sales goals are now planned to be eliminated by Jan 1, 2017. (Read more: Wells Fargo Fined $190M for Illegal Sales Practices)
The fine has led to a significant embarrassment for Wells Fargo as its reputation is expected to see some damage, according to Moody’s Investors Service – the rating unit of Moody's Corp. (MCO - Free Report) . Additionally, Wells Fargo's chief executive – John Stumpf – has been summonedto appear before the Senate Banking Committee, next week, to answer questions about the bank's sales practices.
Further, the U.S. Attorneys' Offices in Manhattan and San Francisco have begun an investigation related to the sales practices at Wells Fargo. Nevertheless, the bank has temporarily announced suspension of cross-selling its financial products to customers by call center workers.
Moreover, as a result of these regulatory issues, Wells Fargo lost its position of being the biggest U.S. bank by market capitalization to JPMorgan Chase & Co. (JPM - Free Report) .
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How Much Did Warren Buffett Lose on the Wells Fargo Scam?
Warren Buffett has lost nearly $1.6 billion since the announcement of the regulatory fine on Wells Fargo & Company (WFC - Free Report) for its illegal sales practices, which saw its shares drop by 6.8%.
Buffett – the world’s fourth richest man with a personal wealth of $65.8 billion – has long boasted about the safety and surety of Wells Fargo. However, he saw his net worth drop significantly, as his holding company Berkshire Hathaway Inc. (BRK.B - Free Report) owns a 9.5% stake in Wells Fargo. Further, Berkshire declined 2.7% with the revelations about the bank’s massive fraud scandal.
Since last week, Wells Fargo has been facing tough times as the regulatory authorities entered into a $190-million-settlement agreement with the bank. The banking giant has been slapped with charges of illegally opening 1.5 million unauthorized accounts to meet their aggressive internal sales goals. Nonetheless, these sales goals are now planned to be eliminated by Jan 1, 2017. (Read more: Wells Fargo Fined $190M for Illegal Sales Practices)
The fine has led to a significant embarrassment for Wells Fargo as its reputation is expected to see some damage, according to Moody’s Investors Service – the rating unit of Moody's Corp. (MCO - Free Report) . Additionally, Wells Fargo's chief executive – John Stumpf – has been summonedto appear before the Senate Banking Committee, next week, to answer questions about the bank's sales practices.
Further, the U.S. Attorneys' Offices in Manhattan and San Francisco have begun an investigation related to the sales practices at Wells Fargo. Nevertheless, the bank has temporarily announced suspension of cross-selling its financial products to customers by call center workers.
Moreover, as a result of these regulatory issues, Wells Fargo lost its position of being the biggest U.S. bank by market capitalization to JPMorgan Chase & Co. (JPM - Free Report) .
Currently, Wells Fargo carries a Zacks Rank #3 (Hold). If you want to have a look at some of our better-ranked stocks, you can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
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Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>