Should Investors Be Concerned About Wells Fargo's Latest Regulatory Headache?
Wells Fargo (NYSE: WFC) cruised through much of the first eight months of 2021. The bank showed progress on regulatory issues related to its phony-accounts scandal, and it also put a solid plan in place to improve profitability. A good set of results in the second quarter sent the stock up to $51 per share in August, a nearly 70% gain this year.
Recently, however, Bloomberg reported that regulators are weighing further action in regard to matters associated with the phony-accounts scandal. The news caught the market off guard, sending Wells Fargo's stock down more than 10% in a two-day period, which is a big move for a large bank. Should investors be concerned about the recent report? Let's investigate.
The Bloomberg report is the latest in what has now been a years-long headache for Wells Fargo. In 2016, it came to light that employees at the bank had opened millions of depository and credit card accounts without customers' authorization, in addition to charging customers for other products without their consent. What followed were numerous consent orders from regulators, billions of dollars in fines, and an order from the Federal Reserve that prevented Wells Fargo from growing its balance sheet until it improved its regulatory infrastructure.
Source Fool.com
