This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Wells Fargo's Friday Before Christmas 8-K: Street Whispers

NEW YORK ( TheStreet) --When a bank makes a regulatory filing late on a Friday afternoon ahead of Christmas, it merits special attention, if only because banks are sneaky, and that would be a really good time to hide a bombshell of one kind or another.

For example, what if Wells Fargo (WFC - Get Report) paid $590 million to settle a single lawsuit against former Wachovia CEO Ken Thompson?

That is one of the claims made in a lawsuit brought by shareholder W.M. Rogers that Wells Fargo recently agreed to settle, according to Friday's 8-K filing with the Securities and Exchange Commission, and it is close enough to the truth that it merits closer scrutiny.

Wells Fargo indeed paid $590 million roughly a year ago to settle a lawsuit brought against Wachovia, which it acquired on the first day of 2009, and one of the defendants in that suit was Thompson.

Rogers' lawsuit--which, according to Friday's 8-K filing, he and Wells Fargo agreed to settle--effectively stated that Wells Fargo should have gone after Thompson itself to recoup at least a portion of the $590 million. By not doing so, Rogers argued, Wells Fargo hurt its own shareholders. Instead, Rogers' lawsuit states, Thompson got a few million dollars in severance upon leaving Wachovia.

Wells Fargo may argue that its acquisition of Wachovia was worth billions, so even $590 million was well worth shelling out. It may argue that going after Thompson would have cost more than it was worth.

I could find no such argument among the filings unveiled Friday in connection with Rogers' lawsuit, though there were so many, I can't swear they weren't there. An email I sent shortly after midnight Monday to Wells Fargo spokespeople wasn't immediately returned.

But it is worth wondering: how much money do Thompson and the other former board members of Wachovia have today? One suspects, in many instances, it is far more than you or I.

And why do they have anything at all--particularly when Wells Fargo has had to pay hundreds of millions if not billions of dollars to resolve mortgage-related misdeeds and other messes, such as laundering Mexican drug money, that they left behind?

It isn't as though Wells Fargo wasn't aware of the massive trouble at Wachovia. It isn't as though there were other deep-pocketed potential acquirers out there waiting to pounce, and so requiring Wells Fargo to agree to bail Wachovia out of its legal troubles. The only other potential acquirer was Citigroup (C), which was at least as much of a disaster as Wachovia. That's why former FDIC chairman Sheila Bair was so happy to throw out Citigroup's deal with Wachovia when Wells came along.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
WFC $50.00 0.00%
AAPL $95.18 0.00%
FB $117.43 0.00%
GOOG $692.36 0.00%
TSLA $232.32 0.00%


Chart of I:DJI
DOW 17,750.91 -140.25 -0.78%
S&P 500 2,063.37 -18.06 -0.87%
NASDAQ 4,763.2240 -54.37 -1.13%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs