Wells Fargo is grappling with the dent in its reputation due to bogus account scandal unveiled last year. The bank also posted mixed quarterly results missing the top-line market expectations. In an attempt to rebuild investor confidence, the two top executives Chairman Stephen Sanger and Chief Executive Officer Tim Sloan bought a little more than $5 million of the company’s stock on Monday.
According to the regulatory filings with Securities and Exchange Commission, Sloan purchased just over $2 million of shares, while Sanger purchased a little over $3 million at a price of $51.65. Wells Fargo stock price advanced by around 80 cents post these purchases. Sloan has served as a CEO since October prior to which he was Wells Fargo’s chief operating officer and president. He took over from John Stumpf who resigned on the cross-selling scandal. Sanger is the one who led the board’s investigation into the bogus accounts.
The first annual shareholder meeting, after the bank paid $185 million to settle with government agencies, is scheduled on 25th April. In this meeting, the investors will vote on measures to improve the reputation and the performance of the bank, which includes voting on whether to remove or move on with the same board.
The bank’s spokesperson clarified that these purchases are in the individual capacity and has nothing to do with compensation. A senior research analyst Max Magee working for stock buyback research group Insider Score said that this buying can be an attempt by the top management to shift the news cycle towards positive news.
Magee said, “Given that insiders receive generous stock-based compensation, insider buying of any kind is rare, and the fact that these two purchases are coming on weakness does suggest that there may be some opportunism in their decision to buy here.”
Warren Buffett’s Berkshire Hathaway announced on last Wednesday that it is selling 9 million shares of the bank post which the investor confidence has shaken further. Berkshire has specified that it is selling these shares due to possible Federal Reserve regulations.
Sloan has said post results, “Clearly we have had a very difficult period in our history. Rebuilding trust is our most important activity. Every day, we are continuing to make progress.”
He has accepted that there was a reduction in both the new account openings and credit card applications in the first quarter. But, he is hopeful that the bank’s performance will rebound post second quarter.