Earlier this month, Wells Fargo fired four foreign exchange bankers. It was—incredibly—the scandal-ridden bank’s first foray into forex malfeasance. At the time, Wells was somewhat reticent about providing details, noting only that it had to do with a single transaction for a single client. Oh and also this:
In its statement, Wells Fargo said, “The departure of these employees was not related to issues involving market collusion, front-running or market manipulation.”
We’re pretty sure you can see where this is going.
The investigation, which is in the early stages, is being conducted by the U.S. Attorney’s Office for the Northern District of California, some of the people said. The office subpoenaed information in recent days, according to some of the people….
Federal prosecutors are looking into the sequencing of the trade in question and whether it could have involved so-called front-running, some of the people familiar with the matter said.
And just who were these bankers fired for something other than front-running possibly front-running? Why, Restaurant Brands International, owner of the likes of Burger King, Tim Hortons and Popeyes, and the only stock on which Bill Ackman has made money this decade. And since that single position was measured in the billions of dollars, Restaurant Brands wasn’t too happy about it.
The trade resulted in a loss to Restaurant Brands, the people added, which led to a dispute between it and the bank.
Wells Fargo is planning to refund Restaurant Brands hundreds of thousands of dollars because of the loss, one of the people familiar with the matter said.
Which seems a pretty reasonable down-payment on not-getting-sued-by-Burger-King insurance, but is likely to be several orders of magnitude smaller than what Wells must pay to make the Justice Department (and Federal Reserve!) go away.