Legendary billionaire investor, Warren Buffet has got rid of a more than 31-year-old investment in Wells Fargo after selling nearly all of his company’s holding in the San Francisco-based bank.
In a regulatory filing on Monday, Berkshire Hathaway Inc, a company owned by Warren Buffet, said it now owns just $26.4 million of shares in Wells Fargo, the fourth-largest U.S. bank, down from around $32 billion in January 2018, Reuters reported.
Wells Fargo had been among Buffet’s most successful investment before the bank was enmeshed in scandals for mistreating customers and allegations of opening fake accounts.
The Omaha Nebraska-based Berkshire began investing in Wells Fargo in 1989, and spent at least $12.7 billion on its shares, building a 10% stake.
Wells Fargo’s reputation was shattered by revelations that the bank’s employees who daily face aggressive sales targets opened millions of unwanted accounts, charged unnecessary mortgage fees and forced drivers to buy car insurance they did not need.
Early last year, John Stumpf, the former CEO of Wells Fargo who presided over the bank while it opened millions of potentially fake accounts, was banned for life from banking as announced by the U.S. government’s Office of the Comptroller of the Currency. He was also ordered to pay a $17.5 million fine for his role in the scandal.
During that time, Warren Buffett told CNBC that Wells Fargo had a “dumb” incentive system and was slow to make things right.
“The big thing is they ignored it when they found out about it,” he said. “You absolutely have to attack a problem as soon as it occurs, and you know about it. And if that had happened, Wells Fargo shareholders would be a lot better off.”
Also in November 2020, the U.S. Securities and Exchange Commission charged two former top Wells Fargo executives with misleading investors about its financial results, according to Reuters.
Berkshire Hathaway still owns shares of other banks, including Bank of America Corp (BAC.N), its largest common stock holding other than Apple Inc (AAPL.O). Wells Fargo paid $3 billion in February 2020 to settle criminal and civil probes.