Activist says Wells Fargo to face tough shareholder resolutions
- AT&T (T) to Acquire Time Warner (TWX) for $107.50/Share
- Rockwell Collins (COL) to Acquire B/E Aerospace (BEAV) for $6.4B
- China Oceanwide to Acquire Genworth Financial (GNW) for $2.7B
- Top 10 News for 10/17 - 10/21: Merger Rumors Abound; CEOs Depart; Tesla Kicks Autopilot Up A Notch
- Wall Street ends little changed; Microsoft hits record
A Wells Fargo branch is seen in the Chicago suburb of Evanston, Illinois, U.S. on February 10, 2015. REUTERS/Jim Young/File Photo
Get inside Wall Street with StreetInsider Premium. Claim your 2-week free trial here.
By Ross Kerber
BOSTON (Reuters) - An activist investor said on Wednesday it is "inevitable" that Wells Fargo & Co (NYSE: WFC) will face critical shareholder resolutions after the bank agreed to a $190 million settlement with regulators over fake consumer accounts.
Tim Smith, who leads shareholder engagement efforts at Walden Asset Management in Boston, said his firm is talking with investors including state pension funds and labor groups about submitting resolutions for the bank's springtime shareholder meeting that may call for things like clawing back executive pay or requiring the company to report on its governance procedures.
The largest U.S. bank by market capitalization last week said it would pay $185 million in penalties and $5 million to customers that regulators say were pushed into fee-generating accounts they never requested.
“It’s inevitable that Wells Fargo will face a series of critical shareholder resolutions in light of this scandal,” Smith said in a telephone interview on Wednesday.
A Wells Fargo spokesman declined to comment.
Federal prosecutors are in the early stages of an investigation into sales practices at Wells Fargo, the Wall Street Journal reported, citing people familiar with the matter.
Shareholder resolutions could be a black eye for San Francisco-based Wells Fargo, which has avoided some of the investor backlash that other large banks faced coming out of the financial crisis under pressure from Walden and other activists.
JPMorgan Chase & Co (NYSE: JPM) for instance agreed to publish a report in 2014 outlining improved controls it put in place including pay clawbacks and minimum share ownership requirements for leaders.
Also, in 2015 pension funds including the California Public Employees' Retirement System challenged Bank of America to split the dual roles of its chair and CEO Brian Moynihan, though their efforts failed.
Smith said a move to split the dual roles of Wells Fargo Chairman and CEO John Stumpf is also a possibility. A vote in April to require an independent chairman at Wells Fargo drew support from only 17 percent of votes cast.
Asked about Wells Fargo's recent settlement, Calpers spokeswoman Megan White said via e-mail the system "will be reviewing the issue in our proxy vote" and declined further comment.
Sanjay Sen, chief investment officer of BloombergSen Investment Partners in Toronto, which has about 2.3 million Wells Fargo shares, said via e-mail that his firm would support any resolution that improves Wells Fargo's management or corporate culture.
Considering the intense focus of regulators and popular distrust of big banks "It really is crazy how stupidly Wells management has behaved," Sen said via e-mail.
(Reporting by Ross Kerber in Boston. Additional reporting by Dan Freed in New York. Editing by Chris Reese and Andrew Hay)
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- UPDATE: Wells Fargo (WFC) Funds President Rabusch Said to Retire
- Boeing takes on peers, partners in bid for replacement parts business
- U.S. government, MetLife set for rematch over 'too big to fail'
Create E-mail Alert Related CategoriesReuters
Related EntitiesJPMorgan, Bank of America, CalPERS, Wells Fargo
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!