The question occurred to me after reading Francine McKenna’s coverage of Senate hearing testimony by Wells Fargo’s CEO about the nearly 2 million unauthorized credit card and savings account openings. I don’t know if the SEC is building an enforcement action against the company, but I am going to tell you why it ought to be.
A Slam Dunk?
There are numerous aspects of SEC filings that could trigger disclosures concerning the unauthorized account openings. At the top of the list would be MD&A, arguably the most principles-based of all financial reporting requirements, supplemented by extensive interpretive guidance and an impressive string of object-lesson enforcement actions.
Companies often produce lengthy MD&A disclosures from core requirements that boil down to two criteria:As of the time of filing, what management knows. Whether a transaction, event or uncertainty that management does know about had, or is reasonably likely to have, a material effect on profitability, liquidity or capital resources.
As indicated by the following from [Read More...]