Pomerantz LLP, Robbins Geller Rudman & Dowd LLP, Glancy Prongay & Murray LLP and Kahn Swick and Foti LLP acted on behalf of the class. Sullivan and Cromwell LLP, Jones Day and Clarence Dyer & Cohen LLP assisted the Defendants.
A class of defrauded investors brought a securities action concerning allegations that Wells Fargo & Company had misled investors about the strength of its commercial loan operations and failed to follow appropriate underwriting and due diligence standards on risky commercial loans worth billions of dollars.
Allegations against Wells Fargo include that: (i) the Company had failed to follow underwriting standards and due diligence guidelines in issuing commercial loans; (ii) a higher proportion of Wells Fargo’s commercial loans were of poor credit quality and at risk of default than previously disclosed to investors; (iii) the Company had failed to write-down commercial loans that had suffered impairments in a timely manner; (iv) Wells Fargo had understated the reserves needed for credit losses; and (v) as a result, the Company was exposed to the risk of serious financial, reputational and legal harm.
In quarterly reports filed with the U.S. Securities and Exchange Commission (the “SEC”) on October 13, 2017, May 4, 2018 and May 3, 2019, Wells Fargo touted the “solid credit quality” and low net charge-off rate (the ratio of defaulted credit balances in comparison to the total amount of credit extended) of its loans.
The truth began to emerge on April 14, 2020, when Wells Fargo issued a press release announcing its first quarter 2020 financial results in which it revealed that it was taking a massive $4 billion provision expense to account for credit delinquencies, which included $940 million in net charge-offs on loans and debt securities and a $3.1 billion reserve build. On this news, Wells Fargo’s share price fell $4.54 per share, or 14.4%, to close at $26.89 per share by April 16, 2020.
Wells Fargo is a global financial services company that provides banking, investment and mortgage products and services, as well as other consumer and commercial financial services. The Company is the fourth largest bank in the United States by total assets and one of the largest banks in the world as measured by both market capitalization and total assets.
Pomerantz assisted Hawaii Employees’ Retirement System with a team comprised of Jennifer Pafiti (Picture) and Jeremy A. Lieberman.
Robbins Geller Rudman & Dowd acted for Norfolk County Council as Administrating Authority of the Norfolk Pension Fund with a team including Danielle Suzanne Myers, Mark Solomon, and Michael Albert. Brian Edward Cochran assisted Steven A. Mullen.
The Glancy Prongay & Murray team was led by Charles Henry Linehan.
The Kahn Swick and Foti team comprised of Ramzi Abadou.
The Sullivan and Cromwell team comprised of Brendan P. Cullen.
The Jones Day team included Jayant W. Tambe, John C. Tang and Robert Moss Tiefenbrun.
The Clarence Dyer & Cohen team was led by Adam F. Shearer, Josh Alan Cohen and Nanci L. Clarence.
Involved fees earner: Nanci Clarence – Clarence Dyer & Cohen LLP; Josh Cohen – Clarence Dyer & Cohen LLP; Adam Shearer – Clarence Dyer & Cohen LLP; Charles Linehan – Glancy Prongay and Murray LLP; Robert Tiefenbrun – Jones Day; Jayant Tambe – Jones Day; John Tang – Jones Day; Ramzi Abadou – Kahn Swick & Foti LLC; Jeremy Lieberman – Pomerantz LLP ; Jennifer Pafiti – Pomerantz LLP ; Brian Cochran – Robbins Geller Rudman & Dowd; Danielle Myers – Robbins Geller Rudman & Dowd; Mark Solomon – Robbins Geller Rudman & Dowd; Brendan Cullen – Sullivan & Cromwell;