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Holly LaFon
Holly LaFon
Articles (10137)  | Author's Website |

Wells Fargo Stock Jumps as CEO Tim Sloan Steps Down

Buffett is largest shareholder at bank seeking new leadership after scandals

March 28, 2019 | About:

Shares of Wells Fargo (NYSE:WFC) soared 3.08% in afterhours trading following the bank’s announcement that its CEO of almost three years, Tim Sloan, will retire.

Sloan assumed the role in October 2016 amid the scandal involving managers creating fake bank accounts to meet sales quotas. The ordeal led to the ouster of the former CEO, John Stumpf.

“Tim Sloan has served this company with pride and dedication for more than 31 years, including in his role as CEO since October 2016. He has worked tirelessly over this period for all of our stakeholders in the best long-term interest of Wells Fargo. His decision, and today’s announcement, reflect that commitment and his belief that a new CEO at this time will best position the company for success,” Wells Fargo board chair Betsy Duke said.

The company’s stock reached $50.38 per share Thursday evening. It has gained roughly 8% since Sloan rose to CEO.

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News of Sloan’s retirement came hours after Warren Buffett (Trades, Portfolio), the bank’s largest shareholder, said he supported the CEO’s efforts.

“I’m very empathetic to anybody who walks into a big problem, at a very, very, very large and politically sensitive institution where you’ve got maybe 250 or so thousand people and the bad acts of one of them can reflect on you,” he told CNBC’s Becky Quick at the Hand-up Success event in Grapevine, Texas.

Wells Fargo is the third largest position in the famed investor’s portfolio at Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B). Buffett owns approximately 9.8% of the bank’s shares outstanding in a long-held position that he has reduced in recent quarters only to keep it below the 10% required by regulations, he has said. His 896.2 million shares were worth $19.67 billion at fourth quarter-end, below his only two larger positions, Apple (NASDAQ:AAPL) and Bank of America (NYSE:BAC).

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Multiple public figures have called for Sloan’s removal from Wells Fargo in the past several years over his handling of the scandal. Elizabeth Warren, U.S. Senator from Massachusetts and presidential candidate who has pushed for Sloan to step down, tweeted Thursday:

“Tim Sloan should have been fired a long time ago. He enabled Wells Fargo’s massive fake accounts scam, got rich off it, & then helped cover it up.”

On March 12, Sloan had testified to Congress about the bank’s issues, including the fake accounts and other incidents in its mortgage, wealth management and mortgage businesses. Members of congress questioned Sloan about whether the bank had done enough to turn around its corporate culture and if it should be downsized.

Numerous investors GuruFocus tracks bought stock in the bank during the fourth quarter, with the biggest purchases being made by Ray Dalio (Trades, Portfolio), David Tepper (Trades, Portfolio) and Joel Greenblatt (Trades, Portfolio). Many also reduced their positions, with Ruane Cunniff (Trades, Portfolio), Paul Tudor Jones (Trades, Portfolio) and Jim Simons (Trades, Portfolio) making the largest sales.

In Sloan’s place, Wells Fargo has named C. Allen Parker, its general counsel from March 2017 to March 2019, as interim CEO, president and board member. The board has already launched a search for a permanent CEO, ahead of Sloan’s June 30 end date.

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About the author:

Holly LaFon
I'm a financial journalist with a Master of Science in journalism from Medill at Northwestern University.

Visit Holly LaFon's Website


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