Shares sold short in Wells Fargo & Co. (NYSE: WFC) rose 10.8 million to 34.2 million, an increase of 46% for the period that ended September 15.
Wells Fargo is embroiled in a fraud scandal around accounts that were opened without the permission of clients. The debacle cost 5,300 jobs and $185 billion. And the trouble is not over. Former employees who were fired have filed suits against the bank, as have some shareholders. It is almost certain federal and state investigations will rise, and some of them may be criminal ones.
The trouble may also cost CEO John G. Stumpf his job.
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One of the largest class action suits is colossal and damning, based on its breadth. According to NPR:
“The biggest victims of this scheme are a class of people that nobody else has talked about,” the lawsuit says. “The biggest victims of Wells Fargo’s scam [are] the class of victims that were fired because they did not meet these cross sell quotas by engaging in the fraudulent scam that would line the CEO’s pockets.”
Executives profited off the scheme, stockholders made a profit over the last five years, and customers will “undoubtedly” get fees refunded, the suit argues. But people who were fired for refusing to break the law are left out in the cold, the lawyers claim.
Wells Fargo’s lofty sales goals were “unrealistic,” “impossible” and “unreachable,” the suit alleges, and employees could not consistently meet the quotas without resorting to fraud or otherwise “gaming” the system.
“Thousands of employees who failed to resort to illegal tactics were either demoted or fired as a result,” the lawsuit states.
And that does not even include the clients or the people who were fired.
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