Wells Fargo & Company (WFC - Free Report) has landed in trouble again thanks to its employees, who reportedly modified or added false information related to corporate customers, without their knowledge, in order to meet a regulatory deadline. The news was first reported by The Wall Street Journal.
Despite strict regulatory scrutiny and promises made by Wells Fargo to improve internal controls, disclosure of such misconducts continues to shake investors’ confidence in the stock. Shares of Wells Fargo dropped 1.5% in yesterday’s trading session.
Per the report, the scandal happened between late 2017 and first few months of 2018. Employees at its Wholesale Banking segment added or changed some personal information such as birth dates, social security numbers and addresses of clients during that period.
Citing people familiar with the matter, Wall Street Journal reported that Wells Fargo has been facing a Jun 30 deadline to comply with a regulatory order related to anti-money laundering controls.
In an internal investigation, Wells Fargo became aware of these misdoings. The matter is currently under investigation by the Office of the Comptroller of the Currency.
A spokeswoman at Wells Fargo said, "This matter involves documents used for internal purposes. No customers were negatively impacted, no data left the company, and no products or services were sold as a result."
Last week, Wells Fargo had launched an ad-campaign — Re-Established — with an aim to gain back the lost reputation by highlighting steps it has taken to repay customers and change its practices.
However, findings of these sort continue to test regulators tolerance toward Wells Fargo’s wrongdoings. In its Investors’ Day held on May 10, the bank said that it expects to continue operating with the regulatory cap on its assets till the first part of 2019. This disclosure might extend that to an even longer time.
Also, the company’s bottom-line remains under pressure due to unstable revenues. However, the bank has an impressive cost-control program underway, which might help it deal with the legal costs and improve financials.
Shares of Wells Fargo have gained 2.1% in the past year, significantly underperforming the industry’s rally of 20.9%.
Wells Fargo currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Northern Trust Corporation (NTRS - Free Report) has been witnessing upward estimate revisions for the last 60 days. Over the past six months, the company’s share price has been up more than 15%. It currently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Comerica Incorporated (CMA - Free Report) has been witnessing upward estimate revisions for the last 60 days. Additionally, the stock jumped more than 20%, in six months’ time. It currently carries a Zacks Rank #2.
M&T Bank Corporation (MTB - Free Report) has been witnessing upward estimate revisions for the last 60 days. Also, the company’s shares have risen more than 14% in the last six months. It carries a Zacks Rank of 2, at present.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>