Berkshire sells almost all of Wells Fargo, a stake since 1989 By Reuters
© Reuters. FILE PHOTO: Berkshire Hathaway CEO Warren Buffett plays bridge during the Berkshire Annual Meeting weekend in Omaha, Nebraska on May 3, 2015. REUTERS / Rick Wilking
By Jonathan Stempel
(Reuters) – Berkshire Hathaway (NYSE 🙂 Inc has sold substantially all of its holdings in Wells fargo (NYSE 🙂 & Co, as Warren Buffett abandoned a more than 31-year-old investment that had been among his most successful before the bank collapsed in scandals for mistreating its clients. In a regulatory filing released on Monday, Berkshire said it only held $ 26.4 million in shares in America’s fourth largest bank as of March 31, up from around $ 32 billion in January 2018. invest in San Francisco-based Wells Fargo in 1989 and spent at least $ 12.7 billion on its shares, constituting a 10% stake. The bank’s reputation was shattered by revelations that employees faced with aggressive sales targets opened millions of junk accounts, charged unnecessary mortgage fees, and forced drivers to purchase car insurance they didn’t need. . The drive grew out of Wells Fargo’s long-standing strategy of selling more products per customer, or cross-selling. Buffett, who is Berkshire’s chief executive, told CNBC in February 2020 that Wells Fargo has a “dumb” incentive system and is slow to get it right. “The most important thing is that they ignored it when they found out,” he said. “You absolutely have to tackle a problem as soon as it arises, and you know it. And if it had happened, Wells Fargo shareholders would be much better off.”
Berkshire, based in Omaha, Nebraska, still owns shares of other banks, including Bank of America Corp (NYSE :), its largest non-Apple Inc (NASDAQ 🙂 common stock stake. Wells Fargo paid $ 3 billion in February 2020 to settle criminal cases. and civil investigations.
Last November, the U.S. Securities and Exchange Commission accused two former Wells Fargo executives of misleading investors about its financial results. Wells Fargo remains subject to a February 2018 Federal Reserve directive banning asset growth until it makes sufficient improvements.
Wells Fargo shares closed on Monday up 94 cents at $ 47.90. Although the price has more than doubled since October, it is 28% below its peak in January 2018.
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