Wells Fargo shares close higher on Monday, bank ordered to return $3.4 million to brokerage customers

On Monday Wells Fargo & Company (WFC) was reported to have been ordered by the Financial Industry Regulatory Authority (FINRA) to return $3.4 million to clients in relation with the sale of high-risk investment products that were not suitable for their profile.

Wells Fargo shares rebounded during the trading session on Monday, following the sharp retreat at the end of the last week. The stock edged up 0.20% ($0.11) to $53.80, with the intraday high and the intraday low being at $53.97 and $53.42 respectively.

In the week ended on October 15th the shares of the third-largest US bank by assets lost 3.40% of their market value compared to a week ago, which marked the first drop in five weeks and also the steepest one since the week ended on May 14th.

The stock has pared its loss to 2.45% so far during the current month, following a 7.99% surge in September. The latter has been the first gain out of three months.

For the entire past year, the shares of the NYSE-listed bank holding company gained 1.38%. However, the stock has retreated 2.38% so far in 2017.

The regulator said that within the period July 2010-May 2012 high-risk exchange-traded products had been sold to at least 1 300 customers by brokers at Wells Fargo. Affected customers were classified as being rather conservative when it comes to risk.

According to FINRA, the value of the exchange-traded products was based on short-term market volatility, but however, some brokers incorrectly considered them to be suitable long-term hedging instruments against a downturn.

The bank had also not ensured that such products were unloaded from client accounts within a period of 30 days, the brokerage industry regulator said.

Despite that Wells Fargo had proper procedures allowing it to make certain that high-risk products were sold only under particular circumstances, such procedures were not implemented correctly, FINRA concluded.

“In cooperating fully with FINRA, we have made significant policy and supervision changes, including the discontinuation of the ETPs in focus”, Shea Leordeanu, a spokesperson for Wells Fargo, was quoted as saying by Reuters.

The issue was identified and remediation efforts were initiated by the bank in May 2012.

According to CNN Money, the 29 analysts, offering 12-month forecasts regarding Wells Fargo’s stock price, have a median target of $60.00, with a high estimate of $67.00 and a low estimate of $35.00. The median estimate is an 11.52% surge compared to the closing price of $53.80 on October 16th.

The same media also reported that 16 out of 33 surveyed investment analysts had rated Wells Fargo’s stock as “Hold”, while 12 – as “Buy”. On the other hand, 3 analysts had recommended selling the stock.

Daily and Weekly Pivot Levels

With the help of the Camarilla calculation method, todays levels of importance for the Wells Fargo stock are presented as follows:

R1 – $53.85
R2 – $53.90
R3 (Range Resistance – Sell) – $53.95
R4 (Long Breakout) – $54.10
R5 (Breakout Target 1) – $54.28
R6 (Breakout Target 2) – $54.35

S1 – $53.75
S2 – $53.70
S3 (Range Support – Buy) – $53.65
S4 (Short Breakout) – $53.50
S5 (Breakout Target 1) – $53.32
S6 (Breakout Target 2) – $53.25

By using the traditional method of calculation, the weekly levels of importance for Wells Fargo & Company (WFC) are presented as follows:

Central Pivot Point – $54.08
R1 – $55.33
R2 – $56.96
R3 – $58.21
R4 – $59.45

S1 – $52.45
S2 – $51.20
S3 – $49.57
S4 – $47.93