UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934

Release No. 90898 / January 11, 2021 

ADMINISTRATIVE PROCEEDING

File No. 3-19704

In the Matter of 

 

 WELLS FARGO & COMPANY, 

Respondent. 

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ORDER APPROVING PLAN OF 

DISTRIBUTION

On February 21, 2020, the Commission issued an Order Instituting Cease-and-Desist 

Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings, 

and Imposing a Cease-and-Desist Order (“Order”)1against Wells Fargo & Company (“Wells 

Fargo”). In the Order, the Commission found that from 2012 through 2016, Wells Fargo

violated the federal securities laws by misleading investors regarding the success of the core 

business strategy of the Community Bank operating segment, its largest business unit. At all 

relevant times, Wells Fargo was a publicly traded financial services corporation with common 

stock registered under Section 12(b) of the Securities Exchange Act of 1934 (“Exchange Act”) 

and quoted on the New York Stock Exchange (Ticker: WFC). According to the Order, Wells 

Fargo, among other things, failed to disclose to investors that the Community Bank’s sales model 

had caused widespread unlawful and unethical sales practices misconduct that was at odds with 

its investor disclosures regarding needs-based selling, and that the publicly reported cross-sell 

metric included significant numbers of unused or unauthorized accounts. The Commission 

found that Wells Fargo violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder 

and ordered it to pay a $500 million civil money penalty to the Commission. The Commission 

also created a Fair Fund, pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, so the 

penalty paid by Wells Fargo can be distributed to harmed investors (the “Fair Fund”). 

Wells Fargo has since paid in full. The Fair Fund has been deposited in an interestbearing account at the United States of Treasury’s Bureau of Fiscal Service. Interest and any 

 

1

 Exchange Act Rel. No. 88257 (Feb. 21, 2020).
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additional funds received pursuant to Commission or Court order, agreement, or otherwise, will 

be added to Fair Fund.2

The Fair Fund currently holds approximately $502.7 million, comprised of the $500 

million civil penalty paid by Wells Fargo and the $2.5 million civil penalty paid by Stumpf, plus 

accrued interest. 

By Order dated May 21, 2020, the Commission appointed Rust Consulting, Inc. as the 

fund administrator for the Fair Fund (“Rust”) and set the administrator’s bond amount at $500

million.

3

On August 6, 2020, the Secretary, pursuant to delegated authority, published a Notice of 

Proposed Plan of Distribution and Opportunity for Comment (“Notice”),

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pursuant to Rule 1103

of the Commission’s Rules on Fair Fund and Disgorgement Plans (the “Commission’s Rules”).

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The Notice advised all interested persons that they may obtain a copy of the proposed plan of 

distribution (“Proposed Plan”) from the Commission’s public website at 

http://www.sec.gov/litigation/fairfundlist.htm or by submitting a written request to Catherine E. 

Pappas, Senior Advisor, United States Securities and Exchange Commission, One Penn Center, 

1617 JFK Blvd., Ste. 520, Philadelphia, PA 19103. All persons who desired to comment on the 

Proposed Plan could submit their comments, in writing, no later than September 5, 2020. The 

Commission received one comment during the comment period.

After considering the comment received on the Proposed Plan, the Commission staff, 

working with the Fund Administrator, recommends that the Proposed Plan be approved without 

modification. 

After careful consideration, the Commission concludes that the Proposed Plan should be 

approved without modification.

6

 

 

2

 An additional $2.5 million paid by John G. Stumpf in a related matter has been added to the Fair Fund as ordered. 

See Order Instituting Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933, Making 

Findings, and Imposing a Cease-and-Desist Order, Securities Act Rel. No. 10887 (Nov. 13, 2020), In the Matter of 

John G. Stumpf, Admin. Proc. File No. 3-20148. 

3 Order Appointing Fund Administrator and Setting Bond Amount, Exchange Act Rel. No. 88921 (May 21, 2020). 

4

 Exchange Act Rel. No. 89501 (Aug. 6, 2020). 

5

 17 C.F.R. § 201.1103.

6

 After publication, the Commission staff discovered some incorrect cross-references in the Proposed Plan, which 

have been corrected.
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I.

A. Public Comment on the Proposed Plan

Broadridge Financial Solutions (“Broadridge”) submitted a letter dated September 3, 

2020 objecting to two paragraphs in the Proposed Plan regarding procedures to be followed with 

respect to Third-Party Filers.

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1. Objection to Proposed Plan Paragraph 65

Broadridge objects to paragraph 65 of the Proposed Plan and, in particular, the following 

provision:

Documentation generated by the Third-Party Filer as well as 

affidavits in lieu of supporting documentation, will not be accepted 

unless, for good cause, the Fund Administrator determines it 

acceptable.

Broadridge claims that “it is the common practice in U.S. securities class actions and with 

SEC Fair Funds for processing services providers to submit to Fund Administrators data files 

that cover millions of transactions across thousands of claims in any one case. These files are 

submitted together with supporting affidavits or similar documents verifying that the records are 

true, accurate and complete. Because these affidavits are accepted in lieu of supplying millions 

of pages of documents or printouts of client screen shots, the process is both accurate and 

efficient. ... [B]y adding new steps for claims submitted by Third-Party Filers, the [Proposed 

Plan] would make claims submission significantly more burdensome and this could impede 

participation.” 

The Commission has considered this objection and concludes that it does not require 

modification to the Proposed Plan. In consultation with members of its fund administrator pool 

(“Pool Members”), including Rust, the Commission staff has determined that the requirements of 

paragraph 65 are necessary for the protection of the distribution from fraudulent claims. 

Moreover, paragraph 65 does not preclude the submission of data files with an affidavit, as long 

as the Fund Administrator deems the documentation acceptable for good cause. 

 

7 Third-Party Filers are defined in the Proposed Plan as a third-party, including without limitation a nominee, 

custodian, or an intermediary holding in street name, who is authorized to, and submits, a claim(s) on behalf of one 

or more Potential Claimants. Proposed Plan, ¶ 27. 
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2. Objection to Proposed Plan Paragraph 66

Broadridge objects to paragraph 66 of the Proposed Plan and, in particular, the following 

provisions:

Distribution Payments must be made by check or electronic 

payment payable to the Potential Claimant (beneficial account 

owner). The Third-Party Filer shall not be the payee of any 

Distribution Payment check or electronic Distribution Payment.

Broadridge further objects to the Proposed Plan’s preclusion of the offset of Third-Party Filer 

fees from distribution payments, claiming that the offset of costs from payments will preclude 

Third-Party Filers from deferring their costs or aligning work performed with the payments 

recovered. 

The Commission has considered this objection and concludes that it does not require 

modification to the Proposed Plan. In consultation with Pool Members, including Rust, the 

Commission staff has determined that the preferred method of payment is directly to the Eligible 

Claimant, as directed by paragraph 66. Notwithstanding, on occasion, with proper 

documentation including confirmation that the underlying contract with the Eligible Claimant 

exists and permits payment to the Third-Party Filer, the fund administrator may send a payment 

to the Third-Party Issuer for the benefit of the Eligible Claimant. This is consistent with 

paragraph 66, which permits the Fund Administrator, in consultation with the Commission staff, 

to use an alternative payment arrangement, if authorized by the Eligible Claimant. The 

Commission further concludes that the preclusion in paragraph 66 of the offset of Third-Party 

Filer compensation from Distribution Payments is appropriate as a means by which to protect the 

integrity of Commission distributions and will not significantly restrict distribution participation. 

B. Approval of the Proposed Plan

For the reasons stated above, the Commission finds that the Proposed Plan is fair and 

reasonable and should be approved without modification. 

II.

Accordingly, it is hereby ORDERED, pursuant to Rule 1104 of the Commission’s Rules,

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that the Proposed Plan is approved, and the approved Plan of Distribution shall be posted 

simultaneously with this Order on the Commission’s website at www.sec.gov.

By the Commission.

Vanessa A. Countryman

Secretary 

 

8

 17 C.F.R. § 201.1104.