Law360 (September 9, 2020, 4:54 PM EDT) -- The Rosen Law Firm PA was tapped on Tuesday to represent a proposed class of Wells Fargo shareholders who claim the bank hurt investors by mismanaging its Paycheck Protection Program lending.
The law firm, which specializes in representing investors in securities class actions, was appointed lead counsel in a Tuesday order by U.S. District Judge Richard Seeborg, who at the same time appointed the firm's client, individual investor George Kwinecki, to serve as lead plaintiff for the proposed class in the California federal court suit.
In the order, Judge Seeborg said Kwinecki had the largest financial interest in the matter. Court records show that Kwinecki claimed he lost about $162,896.92 in connection with the alleged securities fraud.
Kwinecki and Rosen's bid to lead the case initially faced competition.
In August, Winston P. Kuo, an individual investor who is represented by Levi & Korsinsky LLP, claimed he lost $27,885.95 in connection with the alleged securities fraud.
And David Coy and Aaron Yortiss, a pair of investors represented by Roche Cyrulnik Freedman LLP and Pomerantz LLP, said that together they lost "at least" $212,312.67 as a result of the alleged misdeeds. Coy and Yortiss also asked Judge Seeborg to appoint the Schall Law Firm and Bronstein Gewirtz & Grossman LLC as additional counsel alongside their proposed co-lead counsel team.
Both Kuo and the Coy-Yortiss team filed notices with the court later in August telling Judge Seeborg they didn't oppose Kwinecki's bid.
In the suit, which launched in June, individual Wells Fargo investor Guofeng Ma accused the bank and some of its leadership of misrepresenting its distribution of PPP loans under the Coronavirus Aid, Relief and Economic Security, or CARES, Act.
Ma claimed that the bank "planned to, and did, improperly allocate government-backed loans under the PPP, and/or had inadequate controls in place to prevent such misallocation" contrary to its representations to the public.
As a result, Ma claimed, the company made itself a target for litigation and scrutiny from regulators — and when the company revealed in filings with the U.S. Securities and Exchange Commission that it was facing both in connection with its pandemic lending practices, its stock price fell.
The proposed class would include those who purchased Wells Fargo shares between between April 5, when the bank announced it aimed to distribute $10 billion in PPP loans in response to strong interest, and May 5, when revelations about the lawsuits and regulatory probes were made public and subsequently pushed down the company's trading price by 6% over a two-day period, according to Ma.
Counsel for the parties and a representative for Wells Fargo did not immediately respond to requests for comment Wednesday.
Kwinecki is represented by Laurence M. Rosen of the Rosen Law Firm PA.
Wells Fargo and executives Charles W. Scharf and John R. Shrewsberry are represented by Brendan P. Cullen and Sverker K. Hogberg of Sullivan & Cromwell LLP.
The case is Ma v. Wells Fargo & Co. et al., case number 3:20-cv-03697, in the U.S. District Court for the Northern District of California.
—Additional reporting by Rachel O'Brien, Grace Dixon and Craig Clough. Editing by Daniel King.
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