Wells Fargo Sued By Navajo Nation For Unfair Sales Practices

Yesterday, Wells Fargo & Company (NYSE:WFC) was served with another lawsuit on its plate by Navajo Nation, a Native American territory, for having exploited its “most vulnerable population” into opening accounts they did not require.

It was only yesterday that investors were ready to put behind Wells Fargo’s disappointing past with renewed hopes on the banks’ performance, which is expected to get support from lower tax rates policy. The market’s positive attitude toward the San Francisco, CA-based bank helped it breach the 52-week high. However, this latest news of the bank’s misdeeds might act as a setback.

Major Allegations

This lawsuit can be considered a minor recap of the fake-accounts scandal Wells Fargo was involved in September 2016. The only difference being that the bank’s representatives fulfilled their sales targets by taking advantage of the elders who do not understand English. Also, they targeted the minors by opening accounts in their names and falsely reporting their ages.

In fact, the bank has been accused of having pushed locals into opening unnecessary accounts by following them into events such as flea markets and basketball games.

Russell Begaye, President of Navajo Nation, showed his disappointment in the bank by saying, “Wells Fargo’s actions toward the Navajo people have been of a uniquely outrageous nature.”

John Hueston has been appointed as the attorney and is directed “to seek restitution, damages and civil penalties” for the wrong doings of the bank. The community has been deeply impacted by this as Wells Fargo is the only major bank that has branches in the area.

Spokesperson of Wells Fargo refrained from comments on the matter.

Our Viewpoint

Currently, the bank has a lot to deal with on the litigation front. Further, Trump’s recent comments on Wells Fargo’s deeds are on legal matters reflect that the bank’s financial statements will be dominated by higher legal costs.

Shares of Wells Fargo have gained 9.5% year to date, underperforming the industry’s rally of 17.8%.

Currently, the stock carries a Zacks Rank #4 (Sell).

Stocks to Consider

Enterprise Financial Services Corporation (NASDAQ:EFSC) witnessed a 1.2% upward estimate revision for current-year earnings, over the last 60 days. Additionally, the stock has gained 4.9% over the past six months. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

First Financial Bancorp’s (NASDAQ:FFBC) current-year earnings estimates have been revised 2% upward in the last 60 days. Also, the company’s shares have risen nearly 1% in the past six months. It holds a Zacks Rank of 2, at present.

Federated Investors (NYSE:FII) witnessed 3.4% upward estimate revisions for current-year earnings, over the last 60 days. In six months’ time, the company’s share price has been up more than 23.8%. It also carries a Zacks Rank of 2.

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