Wells Fargo Ex-CEO’s Stock Trading Raises HUGE Red Flags (VIDEO)

John Stumpf’s terrible, horrible, no good, very bad fall may be about to get worse. On Wednesday, he was forced to resign as chairman and CEO of Wells Fargo amid a growing outcry surrounding the opening of bogus checking and credit card accounts. Now, with the ink just starting to dry on Stumpf’s resignation, there are questions surrounding his trading patterns in the period before his bank was slapped with record fines for screwing its customers.

Late Friday, CBS News reported that Stumpf sold some $61 million in stock in the month before the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency, and the city and county of Los Angeles fined Wells Fargo $185 million for opening the bogus accounts. In the process, he made a $26 million profit. At least two securities law experts think that the timing of Stumpf’s trades was curious at best.

Chicago securities lawyer Andrew Stoltmann thinks that at the very least, “the optics are horrific for Stumpf and for Wells Fargo.” After all, it raises the appearance that Stumpf engaged in insider trading. Given the stakes, Stoltmann said that he would be “shocked” if the Securities and Exchange Commission doesn’t investigate the trades. Corporate governance consultant Nell Minow thinks that a stock sale of this magnitude so soon before the announcement of a hefty fine for fraud would almost certainly trigger an SEC investigation. Minow added that best practices call for a board of directors to restrict such sales, if only to avoid the appearance of wrongdoing.

Now why does this matter? Well, take a look at Wells Fargo’s stock price. At the close of business on August 31, Wells Fargo was trading at $50.80 a share. When the fine was announced on September 8, it was worth $49.89. Since then, the stock has dropped as fast as Donald Trump’s polling numbers. As of Friday, it is trading at $44.38 a share–a loss of 10 percent in the last month, and a loss of $25 billion for the bank’s shareholders.

In a statement, Wells Fargo said that the trades complied with its “pre-clearance approval process for executive officers.” But at the same time, it does not consider this fine to be a “material event.” I’m no financial expert, but it shouldn’t take one to know this explanation is baloney. How is a massive fine for defrauding your own customers not a “material event”? This is important, since trading on material non-public information is illegal.

It’s not the first time that Stumpf’s trading has raised suspicion. When Stumpf testified before the House Financial Services Committee on September 30, Congresswoman Carolyn Maloney asked Stumpf to explain why he unloaded $13 million in stock immediately before the bogus accounts scandal first broke in 2013. Watch a clip here.

When Maloney asked Stumpf about the “serious questions” raised by the “very, very suspicious” timing of the trades, Stumpf denied any wrongdoing. Maloney wasn’t buying it, saying that Stumpf helped himself rather than his customers.

And now we learn that Stumpf displayed unusually good timing in unloading more stock just before the announcement of the fine. At the very least, this situation is firmly in “what did they know and when did they know it?” territory.

(featured image courtesy Justin Ruckman, available under a Creative Commons-BY license)

Darrell is a 30-something graduate of the University of North Carolina who considers himself a journalist of the old school. An attempt to turn him into a member of the religious right in college only succeeded in turning him into the religious right's worst nightmare--a charismatic Christian who is an unapologetic liberal. His desire to stand up for those who have been scared into silence only increased when he survived an abusive three-year marriage. You may know him on Daily Kos as Christian Dem in NC. Follow him on Twitter @DarrellLucus or connect with him on Facebook. Click here to buy Darrell a Mello Yello.