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WELLS FARGO & COMPANY

(WFC)
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Delayed Nyse  -  04:03 2022-10-03 pm EDT
41.58 USD   +3.38%
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U.S. states sue Warburg-owned Mariner Finance, allege predatory lending

08/16/2022 | 04:15pm EDT
An unidentified man using a smart phone walks through London's Canary Wharf financial district in the evening light in London

NEW YORK (Reuters) - A lender owned by private equity firm Warburg Pincus LLC was sued on Tuesday by several U.S. states, and accused of charging cash-strapped borrowers hundreds of millions of dollars for "hidden" add-on products that they never agreed to buy.

Mariner Finance, with more than 480 offices in 27 states, was accused of engaging in "widespread credit insurance packing," by selling costly policies and other products without telling borrowers or even after being instructed not to.

The plaintiffs - Pennsylvania, New Jersey, Oregon, Utah, Washington state and Washington, D.C. - also said Mariner encouraged employees to trick borrowers into refinancing loans unnecessarily, to generate higher fees and sell more add-ons.

"These kinds of predatory sales practices can lead consumers into a cycle of debt that's hard to overcome," the office of Pennsylvania Attorney General Josh Shapiro said.

Many accusations resembled those that have bedeviled Wells Fargo & Co in recent years, including that employees hit required sales quotas, receive bonuses for selling more products, and face discipline if they "fail to upsell."

The states pinned some blame on Warburg, which bought Mariner in 2013 and oversees more than $85 billion of assets, saying "Mariner's unlawful behavior is motivated by the high-growth demands of its owner."

In a statement, Mariner's founder and Chief Executive Josh Johnson said a "full and fair consideration" of the evidence should lead to the lawsuit's dismissal.

He also said the Nottingham, Maryland-based company had cooperated for nearly four years with the states' investigation, and will "continue to defend itself as an important provider of credit options" to people with limited access to credit.

Warburg referred a request for comment to Mariner.

The New York-based firm's president is Timothy Geithner, who as treasury secretary during the Obama administration criticized predatory lenders.

Geithner is mentioned in Tuesday's lawsuit but is not a defendant.

The lawsuit seeks to unwind borrowers' improper payments, and obtain civil fines, full restitution and repayment of ill-gotten profits.

The case is Pennsylvania et al v Mariner Finance LLC, U.S. District Court, Eastern District of Pennsylvania, No. 22-03253.

(Reporting by Jonathan Stempel in New York; Editing by Marguerita Choy)

By Jonathan Stempel


© Reuters 2022
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Financials (USD)
Sales 2022 73 153 M - -
Net income 2022 15 195 M - -
Net Debt 2022 - - -
P/E ratio 2022 10,5x
Yield 2022 2,65%
Capitalization 158 B 158 B -
Capi. / Sales 2022 2,16x
Capi. / Sales 2023 1,96x
Nbr of Employees 243 674
Free-Float 69,0%
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Number of Analysts 26
Last Close Price 41,58 $
Average target price 53,00 $
Spread / Average Target 27,5%
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Managers and Directors
Charles William Scharf President, Chief Executive Officer & Director
Michael P. Santomassimo Chief Financial Officer & Senior Executive VP
Steven D. Black Chairman
Saul van Beurden Senior Executive VP & Head-Technology
Scott E. Powell Chief Operating Officer & Senior Executive VP
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