The bank Wednesday announced the retirement of Stumpf, who had been chairman and CEO, after he underwent weeks of intense media scrutiny and congressional pressure for him to step down. The cause was news that the bank opened millions of accounts that customers hadn't authorized. Although the bank had fired some 5,300 employees for opening the accounts, critics blamed top executives such as Stumpf for creating a high-pressure sales culture and lofty cross-selling targets.
As is normal with this sort of announcement, the bank disclosed Stumpf's departure toward the end of the trading session. Wells Fargo stock closed Wednesday's session down 13 cents, or 0.3%, at $45.32. In after-hours trading, shares registered a gain of 1.7%. Investors may have been cheered in after-hours trading by news that Stumpf will not receive any severence pay, saving the bank money. (The bank's board had already decided to claw back $41 million of his unvested equity.) They may also have been happy that the bank's board removed a top executive who had become a very public liability.
This optimism is likely to be short-lived, however, and shares were down 1.6% Thursday morning.
Sen. Elizabeth Warren (D., Mass.), who already had sharply reprimanded Stumpf when he appeared before lawmakers, says Stumpf's departure isn't enough and that he should face even more consequences.
A series of Twitter updates posted by Warren suggest that she believes criminal charges may apply in the Wells Fargo case. The senator remarked that if a bank teller is caught slipping a few $20 bills into his pockets, he or she will more than likely face prison time. She also tweeted that Stumpf should pay back all the money he earned during the time when the unauthorized accounts were being opened.
Wells Fargo shares have taken a series of big hits since news broke in early September that the bank was hit with $185 million fine from regulators over what they alleged were "widespread illegal" sales practices.
The bank may come under continued pressure to take further action against Stumpf and other executives.
Some former employees have already filed wrongful-termination lawsuits related to the scandal, and these initial complaints are expected to swell into massive class-action lawsuits.
In the next few weeks, shareholders are likely to pay attention to major investors such as Warren Buffett's Berkshire Hathaway, which has already taken a substantial loss on its Wells Fargo holding this year. Buffett may be waiting for a rebound in the shares to offset some of that loss.
With a Hillary Clinton victory likely in the presidential election, the Wells Fargo scandal could easily become a political talking point. If lurid details begin spilling out of the employee lawsuits, Buffett may have to reconsider his Wells position, particularly if his friends Bill and Hillary Clinton strongly agree with Warren.
These are just a few of the reasons why the scandal, and its impact on Wells Fargo's stock, isn't over.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.