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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
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`Case No.
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`ADAM PERRY, on Behalf of Himself and All
`Others Similarly Situated,
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`Plaintiff,
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` v.
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`WELLS FARGO & COMPANY, CHARLES W.
`SCHARF, TIMOTHY J. SLOAN, and JOHN R.
`SHREWSBERRY,
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`Defendants.
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`
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`CLASS ACTION
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`COMPLAINT FOR VIOLATION OF
`THE FEDERAL SECURITIES LAWS
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`JURY TRIAL DEMANDED
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`Plaintiff Adam Perry (“Plaintiff”), individually and on behalf of all others similarly situated, by
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`and through his undersigned counsel, hereby brings this Class Action Complaint for Violation of
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`Federal Securities Law (“Complaint”) against Wells Fargo & Company (“Company” or “Wells
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`Fargo”); and Charles Scharf, Wells Fargo Chief Executive Officer (“CEO”) and President; Timothy
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`J. Sloan, former Wells Fargo Chief Executive Officer and President; and John R. Shrewsberry, Wells
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`Fargo Senior Executive Vice President and Chief Financial Officer, based upon, inter alia, the
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`investigation conducted by and under the supervision of Plaintiff’s counsel, which included a review
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`of the Company’s public documents, conference calls, and announcements, United States (“U.S.”)
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`Securities and Exchange Commission (“SEC”) filings, wire and press releases published by and
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`regarding the Company, analysts’ reports and advisories abut the Company and readily obtainable
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`information. Plaintiff’s counsel’s investigation into the matters alleged herein is ongoing and many
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`relevant facts are known only to, or are exclusively within the custody or control of, the Company and
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`the Individual Defendants. Plaintiff believes that substantial additional evidentiary support will exist
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`for the allegations set forth herein after a reasonable opportunity for discovery.
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`Case 1:20-cv-04494-GHW Document 1 Filed 06/11/20 Page 2 of 34
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`NATURE OF THE ACTION
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`1.
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`This is a federal securities class action on behalf of a class consisting of all persons
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`other than Defendants who purchased or otherwise acquired common shares of Wells Fargo stock
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`between February 2, 2018, and March 10, 2020, both dates inclusive (the “Class Period”), seeking to
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`recover damages caused by Defendants’ violation of the federal securities laws and to pursue remedies
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`under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule
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`10b-5 promulgated thereunder, against the Company and certain of its top officials.
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`2.
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`Wells Fargo is a Delaware company headquartered in San Francisco, California. Wells
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`Fargo is a financial services company that provides range of products and services, including banking,
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`consumer finance, credit cards, investments, leasing, and mortgages. The Company operates through
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`physical stores, the internet and other distribution channels worldwide.
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`3.
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`On February 2, 2018, Wells Fargo entered into a Consent Order with the Board of
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`Governors of the Federal Reserve System (“FRS Consent Order”), committing to comply with the
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`Federal Reserve System’s (“FRS”) directives regarding its governance and risk management policies.
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`The FRS Consent Order was part of an enforcement action brought against the Company in
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`connection with certain of its fraudulent practices. Soon thereafter, on April 20, 2020, Wells Fargo
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`entered into yet another consent order with the Consumer Fraud Protection Bureau (“CFPB”) and
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`the Office of the Comptroller of the Currency (“OCC Consent Order”), which required Wells Fargo
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`to, among other things, develop a comprehensive plan for identifying and remediating present and
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`future consumer harm.
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`4.
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`After the execution of the FRS and OCC Consent Orders, Wells Fargo embarked on
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`a years-long public campaign to repair its tarnished reputation, which it sought to do by widely touting
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`the corporate reforms Wells Fargo purportedly implemented in compliance with the FRS and OCC
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`Consent Orders. These corporate reforms had several major objectives, including remediation of past
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`Case 1:20-cv-04494-GHW Document 1 Filed 06/11/20 Page 3 of 34
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`harm done to consumers as well as preventing consumer fraud from happening in the future. In its
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`effort to convince the market and the investors that its revamped corporate infrastructure was
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`essentially fraud-proof, Wells Fargo’s disseminated dozens of public statements in its SEC filings,
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`earnings calls, and presentations, touting the progress and the effectives of its reforms which were
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`purportedly taking place consistent with and in compliance with the FRS and OCC Consent Orders.
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`5.
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`In reality, however—and unbeknownst to the investing public—Wells Fargo was far
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`from complying with the regulators’ directive, including repeatedly submitting insufficiently developed
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`and inadequate remediation plans, struggling to meet deadlines, and failing to implement meaningful
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`reforms. The Company’s persistent failure to live up to its commitments under the FRS and OCC
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`Consent Orders even moved the regulators to threaten supervisory and/or enforcement actions and
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`additional penalties, a fact that investors were never apprised of in Wells Fargo’s public statements.
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`6.
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` On March 4, 2020, via the publication of a 113-page report, the market learned that
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`notwithstanding Wells Fargo’s representations over the past two years, Wells Fargo “fell woefully”
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`short of implementing meaningful corporate reforms, and that its risk and compliance policies
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`remained dangerously inadequate to prevent another consumer fraud from occurring. Thus, instead
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`of fixing the broken compliance infrastructures, Wells Fargo engaged in a series of window dressing
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`changes to quench the investors’ demands, while remaining non-compliant with the regulatory
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`directives, in violation of the FRS and OCC Consent Orders.
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`7.
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`On this news, the common shares of Wells Fargo stock (“Wells Fargo shares”) fell
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`more than 10% over two trading days, from $41.40 per share to $37.09 per share.
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`8.
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`Following the publication of the report, on March 10, 2020, the U.S. House Financial
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`Services Committee (“Financial Services Committee”) Chairwoman Maxine Waters (“Chairwoman
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`Waters”) requested that the U.S. Department of Justice (“DOJ”) investigate Wells Fargo’s former
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`CEO, Defendant Sloan, for providing false statements in the context of his public testimony a year
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`Case 1:20-cv-04494-GHW Document 1 Filed 06/11/20 Page 4 of 34
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`earlier, in March 2019, which directly related to Wells Fargo’s compliance with the FRS and OCC
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`Consent Orders and its progress in developing and implementing effective and meaningful reforms.
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`9.
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`On this news, the Company’s shares fell more than 20% over two trading days, from
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`$34.63 per share to $27.20 per share.
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`10.
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`Throughout the Class Period, Defendants made materially false and misleading
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`statements, and failed to disclose material adverse facts about the Company’s business, operational,
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`and compliance policies. Specifically, Defendants made false and/or misleading statements and failed
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`to disclose to investors that: (i) Wells Fargo had inadequate disclosure controls and procedures and
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`internal controls over financial reporting, particularly with respect to its risk and compliance
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`management, policies and programs; (ii) the Company was not compliant with the regulatory consent
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`orders entered into in 2018; (iii) the Company’s remedial plans were inadequate, incomplete, and
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`insufficient to prevent from future consumer abuses; (iv) as a result of the continued noncompliance
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`with the regulatory consent orders, the Company was threatened with supervisory and/or
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`enforcement actions and penalties; (v) the Company’s remedial measures and risk and compliance
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`management remained inadequate to protect against consumer fraud; (vi) as a result of the foregoing,
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`Defendants’ positive statements about the Company’s business, operations, and prospects were
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`materially misleading and/or lacked a reasonable basis and omitted materials facts.
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`11.
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`As a result of Wells Fargo’s wrongful acts and omissions, and the precipitous decline
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`in the market value of Wells Fargo’s common shares, Plaintiff and other Class members have suffered
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`significant losses and damages.
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`JURISDICTION AND VENUE
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`12.
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`The claims asserted herein arise under Section 10(b) and 20(a) of the Exchange Act
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`(15 U.S.C. § 78j(b) and 78t(a)) and Rule 10b-5 promulgated thereunder by the SEC (17 C.F.R. §
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`240.10b-5).
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`13.
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`This Court has jurisdiction over the subject matter of this action pursuant to 28 U.S.C.
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`§ 1331 and Section 27 of the Exchange Act.
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`14.
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`Venue is proper in this Judicial District pursuant to Section 27 of the Exchange Act
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`(15 U.S.C. § 78aa) and 28 U.S.C. § 1391(b), as the alleged misstatements were entered and the
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`subsequent damages took place in this Judicial District. Pursuant to Wells Fargo’s most recent annual
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`report on Form 10-K, as of June 28, 2019, there were 4,099,887,226 shares of the Company’s common
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`stock outstanding. Wells Fargo’s common stock trades on the New York Stock Exchange (“NYSE”).
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`Accordingly, there are presumably hundreds, if not thousands, of investors in Wells Fargo’s common
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`stock located with the U.S., some of whom undoubtedly reside in this Judicial District.
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`15.
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`In connection with the acts alleged in this Complaint, Wells Fargo, directly or
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`indirectly, used the instrumentalities of interstate commerce, including interstate wires, U.S. Postal
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`Service mail, wireless spectrum, and the national securities exchange.
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`PARTIES
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`16.
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`Plaintiff is a resident of Las Vegas, Nevada. As set forth in the attached Certification,
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`incorporated by reference herein, Plaintiff acquired Wells Fargo shares during the Class Period, at
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`artificially inflated prices, and was damaged by the federal securities law violations and false and/or
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`misleading statements and/or material omissions alleged herein.
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`17.
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`Defendant Wells Fargo is a Delaware corporation with a principal place of business at
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`420 Montgomery Street, San Francisco, California 94104. Wells Fargo shares trade on the New York
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`Stock Exchange (“NYSE”) under the ticker symbol “WFC.”
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`18.
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`Defendant Timothy J. Sloan (“Sloan”) served as the Company’s CEO and President
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`from October 2016 until his resignation in March 2019.
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`19.
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`Defendant Charles W. Scharf (“Scharf”) has served as the Company’s CEO and
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`President since October 2019.
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`5
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`20.
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`Defendant John R. Shrewsberry (“Shrewsberry”) served as Senior Executive Vice
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`President and Chief Financial Officer (“CFO”) for Wells Fargo since May 2014.
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`21.
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`Defendants Sloan, Scharf and Shrewsberry are sometimes referred to herein as the
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`“Individual Defendants.” The Individual Defendants, together with Wells Fargo, are sometimes
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`referred to herein as the “Defendants.”
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`22.
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`The Individual Defendants possessed the authority to control the contents of
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`statements made by Wells Fargo in the Company’s reports to the SEC, press releases and presentations
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`to securities analysis, money and portfolio managers and institutional investors, i.e., the market. The
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`Individual Defendants were provided with copies of the Company’s reports and press releases alleged
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`herein to be misleading prior to, or shortly after, their issuance and had the ability and opportunity to
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`prevent their issuance or cause them to be corrected. Due to their positions with Wells Fargo, and
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`their access to Wells Fargo’s material information that was unavailable to the public, the Individual
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`Defendants knew that the adverse facts described herein were not disclosed to and were being
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`concealed from investors. The Individual Defendants are liable for the false statements and omissions
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`alleged herein.
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`SUBSTANTIVE ALLEGATIONS
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`Background
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`23. Wells Fargo is a financial services company that provides a range of products and
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`services, including banking, insurance, investments, mortgage, leasing, credit cards, and consumer
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`finance. The Company operates through physical stores, the internet, and other distribution channels
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`worldwide.
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`24.
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`During the past two decades, Wells Fargo suffered from a complete breakdown of its
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`compliance and risk management infrastructures, which resulted in widespread consumer abuses,
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`including discrimination against minority home loan borrowers, fraudulent bank account opening
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`Case 1:20-cv-04494-GHW Document 1 Filed 06/11/20 Page 7 of 34
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`practices, invalid mortgage fees, unnecessary auto insurance, and erroneous foreclosures and loan
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`modification denials. In 2016, these and other issues reached their pivotal point and erupted in a
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`series of public scandals, attracting intensive regulatory scrutiny. In response, numerous state and
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`federal agencies, including, the DOJ and the SEC levied on Wells Fargo historical cash penalties and
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`imposed severe restrictions and requirements on Wells Fargo’s continued operations and growth.
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`Materially False and Misleading Statements Issued During the Class Period
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`25.
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`The Class Period begins on February 2, 2018. On that day, the FRS brought an
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`enforcement action against Wells Fargo to address the board’s corporate risk oversight failures, which
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`facilitated widespread consumer abuses and compliance breakdowns at Wells Fargo.
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`26.
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`On the same day, Wells Fargo announced, via a press release that, as part of that
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`enforcement action, Wells Fargo entered into a Consent Order with the Board of Governors of the
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`FRS. Pursuant to the FRS Consent Order, Wells Fargo was required to enhance the Company’s
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`compliance and operational risk management in order to prevent from occurring future harm to
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`consumers. Among other things, the FRS Consent Order required Wells Fargo to submit, within a
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`60-day timeframe, plans to “improve the company’s firm-wide compliance and operational risk
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`management program” and to “enhance the board’s effectiveness in carrying out its oversight and
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`governance of [the Company.]” These requirements were put in place after years of regulators’
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`unsuccessful efforts to compel Wells Fargo to fix its pervasive risk management deficiencies which
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`posed a real and imminent threat to its customers.
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`27.
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`Immediately following Wells Fargo’s entering into the FRS Consent Order, Wells
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`Fargo embarked on an intensive public campaign to improve its smeared brand image and to convince
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`investors that the Company was working hard to implement meaningful corporate reforms. During
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`a Business Update Call held the same day, February 2, 2018, to discuss the FRS Consent Order,
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`Defendant Sloan confirmed that Wells Fargo will, within the 60-days, “submit plans to the [FRS] that
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`Case 1:20-cv-04494-GHW Document 1 Filed 06/11/20 Page 8 of 34
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`leverage existing plans and efforts already underway to further enhance the board’s effectiveness in
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`carrying out its oversight and governance of the company and further improve the firm-wide
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`compliance and operational risk management program.” As to compliance and operational risk
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`management, Defendant Sloan represented that the Company “centralized all risk management
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`functions and are now implementing a fully integrated operating model for risk management across
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`all businesses and staff groups.”
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`28.
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`On March 14, 2018, Wells Fargo filed its annual proxy statement with the SEC on
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`form DEF 14A in advance of the 2018 annual meeting of shareholders. Therein, Wells Fargo updated
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`shareholders on its progress and status of the remediation plans and affirmed its previous
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`“commitment[ ] to satisfying the requirements of the [FRS] [C]onsent [O]rder,” and stating in relevant
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`part:
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`As part of our transformation, Wells Fargo is committed to a thorough review of
`the products we offer and the internal procedures we use to get things done. When
`we uncover anything that may be questionable, we address it and remediate
`any customers who may have been financially harmed. To strengthen Wells
`Fargo’s corporate culture, we are listening to our team members and inviting
`outside reviewers to help identify enhancements so we can make sure our culture
`is consistent across the organization.
`29.
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`On April 13, 2018, the Company filed its Quarterly Supplement for the quarter-ended
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`March 31, 2018, affirming its previous commitment to satisfying the requirements of the FRS Consent
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`Order and providing an update regarding the ongoing compliance with the FRS’s directive. To that
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`effect, Wells Fargo vouched to “take the [FRS] Consent Order seriously and [to] work to fully satisfy
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`all of the [FRS] Consent Order’s requirements.”
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`30.
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`During an Earnings Call held the same day to discuss the Company’s financial results
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`and operations, Defendant Shrewsberry committed to “fully satisfy all of the consent order’s
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`requirements” while Defendant Sloan touted the extent of Wells Fargo’s corporate reforms as follows:
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`[O]ver the past 19 months, we’ve taken significant actions to strengthen the
`way we manage operational and compliance risk at Wells Fargo. In March, we
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`Case 1:20-cv-04494-GHW Document 1 Filed 06/11/20 Page 9 of 34
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`announced a new risk-management organizational design, which is an important
`step to ensuring that risk-management functions operate independently and
`provide improved and effective oversight of our businesses.
`31.
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`On April 20, 2018, the Company issued a press release filed with the SEC as Exhibit
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`99.1 to a Form 8-K, announcing that it has entered into consent orders with the CFPB and the OCC,
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`which require the Company to pay an aggregate of $1 billion in civil money penalties to resolve matters
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`relating to the Company’s practices involving certain automobile collateral protection insurance
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`policies and certain mortgage interest rate lock extensions. The OCC Consent Order was imposed on
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`Wells Fargo in response to a variety of consumer abuses, some dating back to 2013. These consumer
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`abuses included Wells Fargo’s practice of inconsistently applying its extension fee policy and
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`improperly charging borrowers fees, including when the bank’s own delay created the need for an
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`extension. Accordingly, an important part of the OCC Consent Order was a requirement that Wells
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`Fargo identifies the root causes of the deficiencies and remedies and corrects all harm done to
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`consumers. In the press release published in connection with the OCC Consent Order, Wells Fargo’s
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`then CEO and President, Defendant Sloan, affirmed Wells Fargo “share[s] the same priorities with
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`our regulators and that we are committed to working with them as we deliver our commitments with
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`focus, accountability, and transparency.”
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`32.
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`On May 4, 2018, the Company filed its quarterly report on Form 10-Q with the SEC
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`for the period ended March 31, 2018 (“May 4 10-Q”). Therein, the Company provided an update
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`regarding its compliance with the FRS Consent Order, disclosing an anticipated review of Wells
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`Fargo’s previously submitted remediation plans to improve the Company’s compliance and
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`operational risk management and its intent to adopt and implement the plan along with its
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`enhancements and improvements by September 20, 2018. Specifically, Wells Fargo stated:
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`On February 2, 2018, the Company entered into a consent order with the Board of
`Governors of the Federal Reserve System (FRB). As required by the consent
`order, the Board submitted to the FRB a plan to further enhance the Board’s
`governance and oversight of the Company, and the Company submitted to
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`Case 1:20-cv-04494-GHW Document 1 Filed 06/11/20 Page 10 of 34
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`the FRB a plan to further improve the Company’s compliance and
`operational risk management program. As part of the review and approval
`process contemplated by the consent order, the Company will respond to
`any feedback provided by the FRB regarding the plans, including by making
`any necessary changes to the plans. The consent order also requires the
`Company, following the FRB’s acceptance and approval of the plans and the
`Company’s adoption and implementation of the plans, to complete by September
`30, 2018, third-party reviews of the enhancements and improvements provided for
`in the plans.
`33.
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`As to its compliance with the OCC Consent Order, the Company similarly stated that,
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`within 60 days, it will be required to submit “an acceptable enterprise-wide compliance risk
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`management plan and a plan to enhance the Company’s internal audit program with respect
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`to federal consumer financial law.” Additionally, the Company represented that it was engaged in an
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`“effort to identify other areas of instances where customers may have experienced financial harm.”
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`34.
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`Appended as an exhibit to the May 4 10-Q were signed certifications pursuant to the
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`Sarbanes-Oxley Act of 2002, wherein Defendant Shrewsberry certified that the “[May 10-Q report]
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`fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934”
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`and that “[t]he information contained in the [May 10-Q report] fairly presents, in all material respects,
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`the financial condition and results of operations of the Company.”
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`35.
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`On May 7, 2018, Wells Fargo was notified, via a formal Response Letter by the FRS
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`(“FRS Response Letter”) that its submission was rejected as “materially incomplete” and that the
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`Company’s remediation plans “cannot be evaluated by [the FRS] staff for their adequacy.” The FRS
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`Response Letter detailed the incomplete elements of Wells Fargo’s submission, noting, among other
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`things, that Wells Fargo’s plan “fail[s] to comprehensively address operational risk.” Wells Fargo was
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`subsequently given two time extensions, until October 31, 2018, to revise its submission.
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`36.
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`On July 13, 2018, the Company filed its Quarterly Supplement for the quarter ended
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`June 30, 2018, affirming its progress in “making further improvements to [the Company’s] compliance
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`and operational risk management programs.” During an Earnings Call held the same day to discuss
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`the Company’s results, Defendant Shrewsberry affirmed Wells Fargo’s commitment to “satisfying the
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`requirements of the Federal Reserve, OCC and CFPB consent orders.” When asked about Wells
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`Fargo’s investment in compliance and operational risk, Defendant Sloan highlighted that Wells Fargo
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`added “about 2,000 folks, team members in the risk function year-over-year,” which Defendant
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`Shrewsberry characterized as being “disproportionately” invested. With regards to the Company’s
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`compliance with the consent orders, Defendant Sloan, commented, in relevant part:
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`[W]e’re working very constructively with the Fed. We’ve gotten some very
`thoughtful feedback from them. And our expectation is that sometime in the first
`half of next year, we’ll be able to move through that.
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`I think the point to emphasize there is that our goal is not to just meet expectations
`so we can get the asset cap lifted. Our goal is to make the fundamental investments
`and changes that we need to make in how we manage operational and compliance
`risk at the company. That’s the goal, and that’s really where we’re focused, but no
`update from a timing standpoint.
`37.
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`As to Wells Fargo’s compliance with the OCC Consent Order, Wells Fargo did not
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`fare much better. On July 24, 2018, Wells Fargo was notified, via a formal Response Letter by the
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`OCC (“OCC Response Letter”) that its submission “lacks substance and detail in a number of
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`areas.” The OCC Response Letter instructed Wells Fargo to submit a revised plan and threatened
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`“future supervisory and/or enforcement actions.” Via the same OCC Response Letter, Wells Fargo
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`was instructed to submit a revised remediation plan.
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`38.
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`Notwithstanding the regulators’ adverse actions and threats, Wells Fargo continued to
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`mislead investors and failed to apprise them of the truthful status, progress, and effectiveness of the
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`ongoing remediation efforts and the resultant risk of future consumer abuse. For example, on August
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`3, 2018, the Company filed its quarterly report on Form 10-Q with the SEC for the period ended June
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`30, 2018 (“August 3 10-Q”). Therein, the Company reiterated its commitment to further improve the
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`Company’s compliance and operational risk management program. In describing the FRS Consent
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`Order, the Company stated:
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`As required by the consent order, the Board submitted to the FRB a plan to further
`enhance the Board’s governance and oversight of the Company, and the Company
`submitted to the FRB a plan to further improve the Company’s compliance and
`operational risk management program. The consent order also requires the
`Company, following the FRB’s acceptance and approval of the plans and the
`Company’s adoption and implementation of the plans, to complete third-party
`reviews of the enhancements and improvements provided for in the plans.
`39.
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`As to the OCC Consent Orders, Wells Fargo stated:
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`As required by the consent orders, the Company submitted to the CFPB and OCC
`an enterprise-wide compliance risk management plan and a plan to enhance the
`Company's internal audit program with respect to federal consumer financial law
`and the terms of the consent orders. In addition, as required by the consent orders,
`the Company submitted for non-objection plans to remediate customers affected
`by the automobile collateral protection insurance and mortgage interest rate lock
`matters.
`40.
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`Appended as an exhibit to the August 3 10-Q were signed certifications pursuant to
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`the Sarbanes-Oxley Act of 2002, wherein the Defendant Sloan and Defendant Shrewsberry certified
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`that the “[August 10-Q report] fully complies with the requirements of Section 13(a) or 15(d) of the
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`Securities Exchange Act of 1934” and that “[t]he information contained in the [August 10-Q report]
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`fairly presents, in all material respects, the financial condition and results of operations of the
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`Company.
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`41.
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`On October 12, 2018, the Company filed its Quarterly Supplement for the quarter
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`ended September 30, 2018. During an Earnings Call held on the same day to discuss the Quarterly
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`Supplement, Defendant Sloan touted the Company’s progress relating to its compliance with the
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`regulatory consent orders, stating in relevant part:
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`And we’re taking their detailed feedback and making changes across the
`company, especially in our operational and compliance risk management structure.
`A key milestone in this process is our newly enhanced risk management framework
`which fundamentally transforms how we manage risk throughout the organization
`in a comprehensive, integrated, and consistent manner.
`42.
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`On November 6, 2018, the Company filed its quarterly report on Form 10-Q with the
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`SEC for the period ended September 30, 2018 (“November 6 10-Q”). Therein, the Company
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`reiterated its commitment to improve the Company’s compliance and operational risk management
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`program. In providing an update on Wells Fargo’s compliance with the FRS Consent Order, Wells
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`Fargo stated:
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`As required by the consent order, the Board submitted to the FRB a plan to further
`enhance the Board’s governance and oversight of the Company, and the Company
`submitted to the FRB a plan to further improve the Company’s compliance and
`operational risk management program. The consent order also requires the
`Company, following the FRB’s acceptance and approval of the plans and the
`Company’s adoption and implementation of the plans, to complete third-party
`reviews of the enhancements and improvements provided for in the plans.
`43.
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`As to Wells Fargo’s compliance with the OCC Consent Order, Wells Fargo stated:
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`As required by the consent orders, the Company submitted to the BCFP and OCC
`an enterprise-wide compliance risk management plan and a plan to enhance the
`Company's internal audit program with respect to federal consumer financial law
`and the terms of the consent orders. In addition, as required by the consent orders,
`the Company submitted for non-objection plans to remediate customers affected
`by the automobile collateral protection insurance and mortgage interest rate lock
`matters, as well as a plan for the management of remediation activities conducted
`by the Company.
`44.
`
`Additionally, Wells Fargo continued to tout its operational and compliance risk
`
`management reforms, stating in relevant part:
`
`At the management level, Wells Fargo Compliance, which is part of Corporate Risk,
`monitors the implementation of the Company’s compliance program. Wells Fargo
`Compliance reports to the CRO and also provides periodic reporting related to
`compliance risk to the Board’s Risk Committee and Compliance Subcommittee. In
`addition, the Risk & Control Committee for each business group and enterprise
`function reports compliance risk matters to the Enterprise Risk & Control
`Committee. We continue to enhance our oversight of operational and compliance
`risk management, including as required by the [FRS and OCC Consent Orders].
`45.
`
`Appended as an exhibit to the November 6 10-Q were signed certifications pursuant
`
`to the Sarbanes-Oxley Act of 2002, wherein Defendant Sloan and Defendant Shrewsberry certified
`
`that the “[November 10-Q report] fully complies with the requirements of Section 13(a) or 15(d) of
`
`the Securities Exchange Act of 1934” and that “[t]he information contained in the [November 10-Q
`
`
`
`13
`
`
`
`Case 1:20-cv-04494-GHW Document 1 Filed 06/11/20 Page 14 of 34
`
`
`report] fairly presents, in all material respects, the financial condition and results of operations of the
`
`Company.”
`
`46.
`
`On March 4, 2019, Wells Fargo was notified, via a formal letter by the OCC that its
`
`revised plan “remain[s] inadequate.”
`
`47.
`
`On March 11, 2019, Wells Fargo was notified, via a formal letter by the FRS that its
`
`revised submission was “riddled with errors and discrepancies, such as incorrect progress
`
`indicators for deliverables and illogical timeframes.”
`
`48.
`
`On March 12, 2019 — only days after Wells Fargo was apprised of its non-compliance
`
`with the regulatory Consent Orders — the Financial Services Committee held a hearing relating to
`
`Wells Fargo’s consumer abuses and compliance breakdowns in connection with the series of scandals
`
`that Wells Fargo engaged in, including the fraudulent consumer account opening scandal uncovered
`
`in 2016, which led to the imposition and signing of the FRS Consent Order. In the opening remarks,
`
`Defendant Sloan touted the Company’s remedial measures and corporate reforms put into place to
`
`prevent future consumer harm. Specifically, Defendant Sloan stated:
`
`We have discarded our old decentralized structure that allowed