Saturday, October 1, 2016

John Stumpf's Sarbanes Oxley Securities Fraud at Wells Fargo

In 2008 and 2009, unknown to shareholders, the public and Congress but known to Wells Fargo CEO John Stumpf among others, Wells Fargo borrowed from the U. S. Federal Reserve Bank's (FED) Term Auction Facility (TAF), which included a massive, material credit line with the FED, details of which were not disclosed within Wells Fargo's 2008 and 2009 Securities and Exchange Commission (SEC) filings.

Unencumbered Collateral, representing assets free and clear of any encumbrances such as creditor claims or liens, showed that Wells Fargo had an unreported FED credit line worth tens of billions.

Unencumbered Collateral in Billions;

On January 31, 2008, Wells Fargo CEO John Stumpf exorcised 68,980 Wells Fargo stock options valued at $2,077,815 without most knowing what he knew at the time, after borrowing $1.6 billion from the FED's TAF on January 17, 2008, as Wells Fargo enjoyed a $47.9 billion credit line with the FED.

On May 15, 2008 among other insider trades, after twice borrowing during 2008 from the TAF, and with more than $45 billion pledged as Unencumbered Collateral, Wells Fargo CEO John Stumpf purchased 1,550 shares of Wells Fargo stock valued at $44,841.

Among others, on June 6, 2008, then Wells Fargo Chairman Richard M. Kovacevich, who also certified SEC filings under SARBOX, purchased 40,398 of Wells Fargo stock valued at $1,052,367 and was not investigated or arrested for Insider Trading and Securities Fraud.

Insider trading involves the purchase or sale of securities of a company or other entity
while in possession of material, nonpublic information (also called “inside information”)
about the company or entity. 

Material Inside Information - “Inside” or “nonpublic information” 
is information about a business organization 
that is not generally available to or known by the public. 

Such information is considered to be “material” 
if there is a likelihood that it would be considered important by an investor 
in making a decision to buy or sell a company’s securities.

Information should be presumed “material” if it relates to, among other things, 
any of the following: 

significant gains or losses; significant merger or acquisition proposals or agreements; 
significant purchase or sale of assets; significant borrowing; 
new debt or equity offerings; liquidity problems...

Director Code of Ethics
Wells Fargo & Company

Wells Fargo's 2008 Annual Report;

Word search for "Term Auction" results = Zero.

Word search for "Discount Window" results = Zero.
Wells Fargo's 2008 annual report certified by John Stumpf, didn’t disclose the overall size of FED’s TAF credit lines, terms, interest charges, dates, collateral, values or amounts of U.S. Government provided financial assistance in violation of SEC and Sarbanes Oxley (SARBOX) reporting laws.

In an interview on Tuesday, June 10, 2008, after Wells Fargo borrowed billions from the FED’s TAF, representing 15.27% of the company's market capitalization, John Stumpf stated "I have a general aversion to using public money, our citizen's money, to bail out problems for a particular sector." and " our company's case, to be able to not only pay for the credit hits we took, we actually added to our reserves." and "We added organically to capital".
FED Chairman Ben Bernanke didn't want to disclose who got what in 2009;

"During the worst financial crisis in our nation's history since the Great Depression - a crisis which has led to the largest taxpayer bailout ever - the very least we can do is explain to the American people what the Federal Reserve is doing with their hard-earned taxpayer dollars," Sanders said. At a Senate Budget Committee hearing on March 3 [2009], Sanders asked Fed Chairman Ben Bernanke to name the hundreds of banks that took money since the financial crisis began. Bernanke refused to name any of the financial institutions and would not say what the banks are doing with the money. Sanders noted that a separate $700 billion financial rescue package that was signed into law last October requires the Treasury Department to identify recipients of bailout funds."

On December 21, 2011, then Wells Fargo Executive Vice President and Controller Richard D. Levy responded to an inquiry by the SEC's Stephanie L. Hunsaker which stated "We have become aware through various news reports that you may have accessed various Federal Reserve and Federal Deposit Insurance Corporation sponsored funding programs during 2008 and 2009, including the Term Auction Facility (TAF)..." And "you do not appear to have provided any discussion about certain other programs that were in existence at this time, such as the TAF, CPFF, PDCF and TSLF."

If the SEC became aware through the news
that Wells Fargo borrowed billions from the FED,
Wells Fargo didn't report the material information to the SEC
in filings certified under SARBOX by John Stumpf,
as the SEC wasn't aware of the loans

Wells Fargo response:

"We did participate in the Term Auction Facility (TAF) during 2008 through August 2009." And "At December 31, 2008, our short-term borrowings under TAF totaled $72.5 billion, which included $40 billion of TAF borrowings by Wachovia Corporation at the time of acquisition. However, the TAF borrowings were classified differently in the legacy Wells Fargo and Wachovia accounting systems..., which resulted in our reporting of $32.5 billion of the TAF borrowings in the “Commercial paper and other short-term borrowings” line item, and the $40 billion of Wachovia TAF borrowings reported in the “Federal funds purchased and securities sold under agreements to repurchase” line item of Note 13 (Short-Term Borrowings) in our 2008 Form 10-K. Despite the accounting systems difference, our management did not distinguish TAF from other sources of short-term borrowings..."
Safety Save

Getting closer; "Wells Fargo sales scandal extends to brokerage unit: US senators"

Just in case...

We are supposed to meet in early November

NPR's Chris Arnold; "Former Wells Fargo Employees Join Class Action Lawsuit"

Awesome; "Former Federal Investigator Says Government Didn't Investigate Wells Fargo Whistleblower Cases"

North Carolina's Consumer Protection Division doesn't really care about helping Wells Fargo's clients

Warren 'News and Record owner' "Buffett made billions amid Wells Fargo fraud" with the help of Allen Johnson and Amanda Lehmert among others

The CFPB didn't do anything about Wells Fargo until the LA Times did

I received a call yesterday from the following two Department of Labor personnel

Dear George Hartzman,

For a meeting with Congressman Mark Walker's office at 10:00 this morning, just in case...

John Stumpf's Sarbanes Oxley Securities Fraud at Wells Fargo

How Wells Fargo Board Whistleblower Communications didn't get to the board's ethics committee

"Wells Fargo Whistleblower Claims Get New Scrutiny in Labor Review"

From the comments; "Wells Fargo CEO John Stumpf has got to resign now"

Wells Fargo Securities Fraud and Insider Trading

Wells Fargo FORM 10-Q QUARTERLY REPORT, 11 — Legal Actions = No mention of Hartzman surviving a motion to dismiss

Dear Andrew Brod and friends who know who they are; "Wells Fargo's community banking exec reportedly leaving with $124.6 million"