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Warren Buffett Dumps Wells Fargo Stock After Sales Scandal Clawbacks

Reuters
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Warren Buffett’s Berkshire Hathaway on Wednesday said it withdrew its application to the Federal Reserve to boost its ownership stake in Wells Fargo above 10 percent, and is instead selling 9 million shares to keep it below that threshold.

Berkshire Hathaway brk.a said it concluded after several months of talks with Fed officials that “the commitments that would be required of us” to maintain a higher stake “would materially restrict our commercial activity with Wells Fargo.”

It also said “investment or valuation considerations” were not factors in the sale of the 9 million shares, which it began on Monday and expects to complete by early July.

Berkshire is the largest shareholder in San Francisco-based Wells Fargo wfc , which has been beset by a scandal since September over its creation of unauthorized customer accounts.

The bank on Monday said it would claw back an additional $75 million of compensation from the executives it blamed most, former CEO John Stumpf and former community banking chief Carrie Tolstedt.

Despite the scandal, Wells Fargo shares have, like shares of many banks, rallied in recent months, gaining 16.6 percent since Donald Trump was elected U.S. president in November.

Buffett told CNBC television on Feb. 27 that Wells Fargo made a “huge mistake” by not immediately addressing the unauthorized accounts, and that letting the problem mushroom made its reputation suffer.

The Fed exerts special oversight when investors take large bank stakes. It often allows double-digit stakes not designed to exert a “controlling influence,” but has said it would review any resulting business relationship “case-by-case.”

Berkshire said it will sell more Wells Fargo shares as necessary to keep its ownership stake “slightly below 10 percent,” including additional sales that may become necessary if the bank repurchases its own stock.

This article was originally published on FORTUNE.com