The following email was sent to [email protected] in the second quarter of 2007. Wells Fargo did not deem this issue worthy of a reply. What do you think? This matter may be worth investigating in further detail. Care to help?
I assume Wells Fargo pre-approved Mr. Kovacevich's nomination and election to the Cisco board of directors in January as required by the Wells Fargo Code of Ethics. However, this same code stipulates all team members, "must avoid conflicts of interests or the appearance of conflicts in your personal and business activities.in many cases, the appearance of a conflict may be just as damaging to Wells Fargo and its reputation as an actual conflict of interest."
Based on publicly available information, there appear to be several conflicts of interest between Mr. Kovacevich's personal business pursuits and the corporate financial objectives and reputation of the Wells Fargo Enterprise. To wit:
1.) Mr. Richard Kovacevich was elected a director at Cisco in January and he now currently holds 30,629 common stock shares valued at $798,804.31. SEC Form 4 dated 11-17-06 also indicates Mr. Kovacevich has an option to buy 15,000 Cisco common stock shares at $26.60. Unfortunately, the public at large does not know whether these shares and options have trade restrictions or whether Mr. Kovacevich is prohibited from buying or selling Cisco stock during his tenure as a Cisco director. This appearance of a conflict of interest may have already directly or indirectly damaged the Wells Fargo Enterprise and its shareholders.
2.) As a recent prospectus indicates, Cisco and Wells Fargo & Company share financial interests: Wells Fargo Securities LLC acts as an underwriter and co-manager for notes issued by Cisco (these notes are valued at $142,498, 000) and Cisco may pay fees to Wells Fargo for commercial banking services. A recent Cisco prospectus quite correctly acknowledges Mr. Kovacevich is both a Cisco director and the Chairman and Chief Executive Officer of Wells Fargo & Company. However, I have been unable to uncover any Wells Fargo communications or publications that identify and properly address the financial conflict of interest that appears to exist between the Enterprise, one of its business partners or customers (Cisco), and a Wells Fargo team member and company officer who has been personally and amply compensated for his services as a Cisco director.
3.) A document (StrategicPartnerUpdateCISCO_PEAP. Doc) published on the Wells Fargo intranet stresses Cisco's relevance as a "strategic partner" and "leading vendor" of the Enterprise. Once again, I have been unable to uncover any documents that properly disclose this potential conflict of interest caused by an Enterprise officer who can influence or approve purchasing decisions and who at the same time, has personally profited from a relationship with one of the Enterprises' leading vendors.
As a Wells Fargo shareholder and Team Member, I look forward to a detailed response to these concerns.
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