A bromance that began in 1931. Wells Fargo & Company (NYSE: WFC) announced today [April 28] that its shareholders elected as directors the 12 nominees named in the company’s proxy statement and approved the 2019 compensation of the company’s executives named in its proxy statement. Shareholders also ratified the appointment of KPMG LLP as the […]
It’s been quite a while since former Deloitte Global CEO Jim Quigley graced the hallowed pages of Going Concern, not since 2015 when Quigs was quoted in the Wall Street Journal for saying how much he absolutely loves being on an audit committee. Let’s refresh your memory: Some directors remain unfazed by the heavy workload […]
Oh, Wells. Buddy. What’s going on? Can’t seem to keep your nose clean. Last week heralded another splashy headline in the WSJ: Wells Fargo Employees Altered Information on Business Customers’ Documents Even we’re getting sick of it! This time, WSJ reported that employees in the wholesale subunit cut corners with data collection — including personal […]
According to a piece from Michael Rapoport and Joann Lublin in the Wall Street Journal today, audit committees are the "junk drawer" of corporate boards. The workload of the powerful committees has expanded sharply beyond their core role of overseeing a company’s financial reporting. They are grappling with new regulations, whistleblower claims and issues like […]
John Carney points out that Bank of America, JP Morgan and Wells Fargo have all appointed new CFOs recently that are not accountants. It harkens him back to a time when another bank made a similar change.
Of course Carney is talking Lehman Brothers and Erin Callan. Oh and Ian Lowitt too. Both served as Lehman’s CFO prior to the bankruptcy. Funny thing – Francine McKenna wrote a post about the problematic situation of having a CFO with no accounting experience three months before Lehman went bankrupt. But BofA, JPM and Wells aren’t Lehman are they? GAAP is really NBD, right? [CNBC]
It boils down to this: if something has less than eight appendages, it’s cool;
greater than eight or more is to be avoided.
“Our business is really pretty simple,” Sloan, 50, said in an interview last week at the bank’s San Francisco headquarters. “When you look at the deal and its structure looks like an octopus or a spider, just don’t do it. That kept us out of a lot of things.”
As we’ve discussed, the sudden departure of Wells Fargo’s now-former CFO, Howard Atkins, has been a bit of a mystery. The bank stated that Howie quit for “personal reasons” but Chris Whalen, for one, wasn’t buying that story and stated that it was an “internal dispute” at the Stagecoach Shop and “public behavior suggests significant problems in the bank’s internal systems and controls as defined by the Sarbanes-Oxley law.”
Then John Carney got all heresay yesterday, reporting:
Others say that the departure stems from a heated argument between Atkins and the CEO of Wells Fargo, John Stumpf. Still others say that there could be even more personal reasons for Atkins leaving.
This is pretty fun because this “heated argument” could have been over something awesome like Atkins’s using Stumpf’s private commode without permission or a spurious challenge in their weekly Scrabble® match. Whatever the reasons for Atkins’s departure, all this speculation got the gang over at The Street wondering that maybe – just maybe – KPMG’s risk management team had soiled themselves over the whole situation and asked the audit team to start drawing up their resignation papers.
KPMG said Friday that it remains Wells Fargo’s […] external auditor, though the firm wouldn’t comment on recent criticism that Wells’ financial disclosures aren’t up to snuff. KPMG spokesman George Ledwith confirmed that the Big Four accounting firm is still working with Wells Fargo, which plans to file its 10-K annual report by the end of the month. Howard Atkins, who had been CFO of Wells Fargo for nearly a decade, resigned unexpectedly last week and won’t be signing off on that report. His replacement, Tim Sloan, will do so instead. “Yes, KPMG LLP is the external auditor for Wells Fargo & Company,” said Ledwith.
So what prompted this brief line of questioning is, in itself, a mystery. KPMG resigning as the auditor of Wells Fargo is about as likely as John Veihmeyer throwing all his copies of Rudy into an incinerator. But then again, maybe The Street knows something we don’t. Was/is/will there be any doubt that KPMG will remain the auditor of Wells Fargo? Rampant speculation and nightmare scenarios are welcome. And if you’re in the know, email us.
Last week, we told you about Wells Fargo’s announcement that their CFO gave himself an early birthday gift by throwing a retirement party for himself. As previously mentioned, Howard Atkins’s departure was a little mysterio and no one had any theories (crackpot or otherwise) on the Atkins’s march in. That all changed yesterday when Christopher Whalen, an analyst at Institutional Risk Analytics issued a report that stated that he, for one, wasn’t buying the “personal issues” story put out by the bank:
“The departure of Atkins, we are led to believe, was not merely the result of personal issues, but reflects an ongoing internal dispute within [Wells Fargo’s] executive suite regarding the bank’s disclosure,” he writes.
Whalen then goes on to argue that Wells Fargo’s “public behavior suggests significant problems in the bank’s internal systems and controls as defined by the Sarbanes-Oxley law. We further understand that some officials of [Wells Fargo], increasingly uncomfortable with the bank’s aggressive public disclosure regime, have reached out to regulators because of concerns regarding accounting issues.”
The Stagecoach Gang, for their part, is sticking to their story citing the “personal reasons” and their spokesman dismissed Whalen’s report with “pfffft” and a wave of the hand, saying, “I haven’t heard anything like that. It’s speculation. I’m not going to comment on it.”
Wells Fargo CFO Exit Tied to Disclosure: Analyst [The Street]
Howard Atkins turns 60 this week but is calling it quits, citing “personal reasons”:
Wells Fargo & Company announced today that Timothy J. Sloan, the company’s current chief administrative officer and a senior executive vice president, has been named its new chief financial officer, effectively immediately. He succeeds Howard I. Atkins, who turns 60 this week and is retiring as CFO and senior EVP for personal reasons. Atkins’ retirement is unrelated to the company’s financial condition or financial reporting.
The retirement is effective in August but Atkins is taking “an unpaid leave of absence he will begin immediately,” according to reports. Maybe this is typical and we’re sure he’s not starving but that still kinda sucks, especially since we don’t see any cake – neither day of birth nor of the retirement variety – in his future. Theories about motives are welcome, especially from any Klynveldians on the audit team or others familiar with the sitch.
Wells Fargo “Strongly” Opposes Accounting Board’s New Rules on Loan Value [Bloomberg]
“Wells Fargo & Co., the largest home lender in the U.S., said it disagrees with an accounting board’s plan that would require banks to report the fair value of loans on their books.
‘We strongly oppose the expansion of fair value as the primary balance-sheet measurement attribute for virtually all financial instruments,’ Wells Fargo Controller Richard Levy wrote in the Aug. 19 letter. ‘It will only serve to cement a short-term focus on fair-value measures.’
Wells Fargo is the first of the largest U.S. banks to publish its p writers who named an affiliation, according to the Financial Accounting Standards Board website. The letter was written to officials at the board, which said in May that it may require banks to report the fair value and amortized cost of loans and some other financial instruments on their balance sheets.”
PricewaterhouseCoopers to Buy Consulting Firm Diamond Management [WSJ]
PwC is paying $378 million for Diamond Management & Technology Consultants, “[share]holders will get $12.50 a share, a 31% premium to Monday’s closing price. The stock, up 29% in 2010 through Monday, was last at the bid level three years ago.
‘This is an attractive all cash opportunity for our stockholders, creates exciting prospects for our people, and will provide us new and enhanced capabilities to bring to our clients,’ said Diamond President and Chief Executive Adam Gutstein. ‘There’s a clear strategic fit between PwC’s assets and aspirations and Diamond’s positioning.’ ”
Return prudence to accounting [FT]
“What a pity that ultra-theoretical standard-setters around the world have chosen to jettison prudence, a generally accepted accounting convention derived from more than 100 years of experience. This high-risk approach has led to absurdly lengthy and unrealistic annual reports that are now virtually incomprehensible.”
Sex Harassment at Work Gets Weirder, Scarier [Bloomberg]
“Not that I think it’s weird that a brokerage firm chief executive would pin a female clerk on the floor by putting his shoe on her breast (the right one, if you must know), or that some insurance company guy in Fullerton, California, would put a sample of his semen in a female colleague’s water bottle. Twice.
But it did get my attention when I started leafing through this year’s press releases from the U.S. Equal Employment Opportunity Commission and found a case where a supervisor allegedly said that women should outfit themselves in Vaseline, and nothing else; one where a manager in human resources (yes, in human resources) allegedly inquired as to the color of an assistant’s panties; and a case against a company president who the EEOC says pulled a subordinate’s pants down in front of her coworkers.”
Borders CFO resigns for new job [Reuters]
Mark Bierley is moving on after 12 years for a new gig.
Businesses Add iPads to Their Briefcases [WSJ]
“Apple, which said it sold more than three million iPads through the end of June, attributes some of the device’s success to businesses. The Cupertino, Calif., company’s Chief Operating Officer Tim Cook said in July that ‘very surprisingly’ half of the Fortune 100 are testing or deploying iPads.
More than 500 of the 11,000-plus applications built specifically for the iPad are in the business category. A free app from Citrix Systems Inc., which allows people to access internal corporate programs from the iPad, has been downloaded more than 145,000 times.
‘Everyone in IT is jumping on this one,’ said Ted Schadler, an analyst at Forrester Research. ‘Rather than wait for people to start complaining they’re saying why don’t we get a few of them in and see what they are good for.’ ”
MLB Confidential: The Financial Documents Baseball Doesn’t Want You To See, Part 1 [Deadspin]
Deadspin got their hands on financial statements for several Major League Baseball teams and even the lowliest of clubs – namely the Pittsburgh Pirates – make truckloads for their owners: $20.4 million in partner distributions for fiscal year ’08.
The sports rag also has financial statements for the Tampa Bay Devil Rays, Florida Marlins and L.A. Angels. And as you might expect, people (MLB and the clubs’ people) are not happy.
The Minneapolis Foundation, the Minnesota Medical Foundation, the Robins Kaplan Miller & Ciresi Foundation for Children and the Minnesota Workers’ Compensation Reinsurance Association have won $29.9 million from Wells Fargo in a Minnesota case that alleged investment fraud and breach of fiduciary duty based on investments the non-profits made that were deemed safe by Wells Fargo.
While similar cases against banks have mostly been settled out of court, this is the first time one such case has gone to trial.
Though the non-profits lost $14.1 million to these shoddy investments, Wells Fargo attorney Robert Weinstine blamed it on the financial crisis and insisted it was not Wells’ fault that funds were lost. The 10-member jury felt otherwise based on internal memos, e-mails and handwritten notes admitted as evidence in the trial.
The jury determined last Thursday that the bank would not be subject to additional payments for punitive damages. Attorney for the four non-profits Mike Ciresi had requested $100 million. Mathlete and Wells Fargo attorney Larry Hofmann told jurors that “zero is the correct number here” in terms of punies.
• BlackRock chief attacks Wall Street earnings – Somebody’s jealous. [FT.com]
• Credit Card Disputes Tossed Into Disarray – “Two major arbitration firms are backing away from the business of resolving disputes between customers and their credit-card and cellphone companies, throwing into disarray a controversial system that prevents unhappy consumers from filing lawsuits.” [WSJ]
• Federal reserve chief heads back to Capitol Hill– “Federal Reserve Chairman Ben Bernanke heads back to Capitol Hill Wednesday, where he’s likely to face more tough questions about the central bank’s extraordinary actions to rescue the economy and its ability to take on even more responsibility.” [AP via Miami Herald]
• Morgan Stanley Loss Misses Estimates on Debt Costs – Creative accounting can’t help MS…[Bloomberg]
• Wells Fargo Says Bad Loans Rise in Second Quarter; Shares Drop – …Or Wells [Bloomberg]