In the years since the Supreme Court handed a decision establishing strict standards for proving standing, very few stock drop cases have made it past the motion to dismiss stage.
The lawsuit seems keenly aware of the poor record other such complaints have had in federal court since the crucial Supreme Court ruling in Fifth-Third vs. Dudenhoeffer—focusing its arguments more on the imprudent concentration of employer stock as opposed to inflated valuations.
The case ascended on appeal from the U.S. District Court for the Western District of Texas, where it also flatly failed to meet the high hurdles for proving standing established in Fifth-Third Bank vs. Dudenhoeffer.
In this case, the alleged knowledge of an artificially high stock price was rooted in the fact that the company had not disclosed that employees of its foreign subsidiaries had violated the Foreign Corrupt Practices Act of 1997 by paying bribes to foreign government officials.
Given a second chance to argue their case, participants in a Wells Fargo retirement plan have again failed to meet the steep pleading standards set out by the influential Supreme Court decision known as Fifth Third vs. Dudenhoeffer.