Eric Starkman Eric Starkman
Serves me right for aping Warren Buffett and thinking I could successfully invest along with the big boys on Wall Street.

I recklessly ignored my experience and values in April and purchased 200 shares of Wells Fargo & Co. I’m knowledgeable enough to know the market is rigged against retail investor dilettantes like me, and the only securities I should ever own are low-cost index ETFs, but I luckily cheated fate once before. Some 20 years ago, I bought stock in a major Canadian bank whose exceptional management I knew well — they were my client — and that investment has long yielded me impressive returns. As Buffett, Wells Fargo’s biggest shareholder and Wall Street cheerleader is supposedly a long-term buy-and-hold investor, I mistakenly thought owning Wells Fargo was a surefire retirement nest egg bet.

My head is still spinning from the disclosure last week that 5,300 Wells employees opened more than 1.5 million bogus deposit accounts and 565,443 credit card accounts without their customers’ knowledge or consent. The sheer magnitude of the dishonesty makes it impossible to buy CEO John Stumpf’s claim that the bank “created no incentive to do bad things.” When more than 5,000 employees engage in the same dishonest practices, I’d argue the systemic activity is akin to a corrupt enterprise. I note that when bank customers file false mortgage documents they get prosecuted for fraud; when a major bank is caught opening an avalanche of bogus accounts that harms their customers they get slapped with a meaningless fine.

I have only myself to blame for my predicament. As a former banking reporter and editor at major publications in the U.S. and Canada (including American Banker), as well as running a PR and crisis communications firm with an accomplished record representing some major financial institutions, I’ve learned to recognize various red flags about companies that Wall Street and the media typically overlook. In Wells Fargo’s case, the warning signs were as clear as daylight. Unfortunately, I was blinded by my greed.

Let’s start with the nearly unanimous belief that Wells Fargo was unquestionably America’s best-managed bank. History teaches us that whenever Wall Street and the media align and tout a company or its management as nearly infallible, the company invariably will blow up or become embroiled in scandal. Enron, WorldCom, Tyco, Healthsouth, AIG, Valeant, and Theranos once were all Wall Street darlings whose CEOs were hailed for walking on water.

Then there’s Wells Fargo’s vision and value statement, which quotes Stumpf as saying, “Everything we do is built on trust. It doesn’t happen with one transaction, in one day on the job or in one quarter. It’s(sic) earned relationship by relationship.” Over the course of my career I’ve learned there’s an inverse relationship between a company’s protestations of ethics and trust and the values they actually practice. To paraphrase a Chris Rock comedy bit deriding pro athletes who proudly declare they don’t cheat on their wives, companies are supposed to be ethical and trustworthy.

Wells Fargo’s open disdain for dissident shareholders and community activists was another warning sign. Though based in San Francisco, the company for years has held its annual meetings outside of California and waits until the last legal possible moment to disclose the location. It also moved the meeting’s starting time to 8:30 a.m., making it virtually impossible for shareholders and dissidents to attend without incurring the cost of a night in a hotel.

Finally, there was my decision to invest alongside Warren Buffett, despite my growing reservations about his values. While I greatly admire Buffett’s investment acumen, he has increasingly demonstrated that he too has shown signs of being a Wall Street vulture investor, underscored by his partnership with 3G Capital, a Brazilian firm known for its ruthless cost cutting and layoffs. As the saying goes, you can judge a person by the company they keep.

Buffett, as best I can tell, has remained silent about Wells’ controversy. My guess is that as long as Wells Fargo rebounds and delivers mighty profits, he doesn’t give a damn how they accomplish it. For the legendary investor, shareholder “values” appear to be only about investment returns.

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Eric Starkman is co-founder and president of public relations firm STARKMAN.