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) 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.

Wells Fargo apparently doesn't have to answer these questions. It reached a deal to settle the lawsuit that raised them, in exchange for agreeing to submit certain meaningless "corporate governance" measures, which amount to paying the same high-priced consultant it probably would have paid anyway to stipulate that any future acquisitions it makes over the next three years aren't overly risky.

But Wells Fargo's problem doesn't appear to be taking on too much risk.

In fact it may have done everything right in this instance.

Still, it is worth asking: when you buy a bank headed into oblivion that no other institution is capable of buying, why do you need to pay that bank's legal bills?

-- Written by Dan Freed in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.