What are these "Medium-Term Notes, Series K"?

These are debt securities issued by Wells Fargo that mature on January 24, 2020. They do not pay interest (0%), and their primary feature is that they can be exchanged for shares of Apple Inc. stock or the cash equivalent of those shares.

What is the main benefit for an investor in these notes?

The main benefit is gaining exposure to the potential upside performance of Apple Inc.'s stock without directly owning the stock. The return on the note will depend on the value of Apple's stock at the time of exchange, minus any purchase price or fees associated with the note itself.

Are these notes guaranteed by Apple Inc.?

No, these notes are issued by Wells Fargo & Company. The exchange feature is for Apple Inc.'s stock, but the creditworthiness and obligation to fulfill the exchange rest with Wells Fargo.

What role do the legal opinions play?

The opinions from Faegre Baker Daniels LLP and Sullivan & Cromwell LLP provide legal assurance regarding the structure, terms, and tax implications of these specific exchangeable notes. They are typically required for regulatory filings to confirm the legality and validity of the financial instrument.

WELLS FARGO & COMPANY/MN 8-K SEC Disclosure

Summary

This 8-K filing from Wells Fargo & Company, dated April 19, 2013, reports on the issuance of Medium-Term Notes, Series K. These notes, due January 24, 2020, are 0% interest and importantly, are optionally exchangeable for the common stock of Apple Inc. or its cash value. This structure indicates a financial product designed to offer investors exposure to Apple's stock performance while providing a fixed-term debt instrument, likely at a discount to face value, with the exchange feature as the primary return mechanism. The filing's primary purpose is to furnish the SEC with the official form of the note, along with legal opinions from Faegre Baker Daniels LLP and Sullivan & Cromwell LLP (Wells Fargo's special tax counsel) concerning these specific financial instruments. Investors should view this as a disclosure of a structured product that links Wells Fargo's debt issuance to the performance of a major technology company, Apple Inc., adding a layer of derivative-like exposure to Wells Fargo's debt offerings.

Key Highlights

1Wells Fargo & Company issued "Medium-Term Notes, Series K, 0% Optionally Exchangeable Securities due January 24, 2020".
2These notes are exchangeable for the Common Stock of Apple Inc. or the cash value of such stock.
3The notes carry a 0% interest rate, meaning the return is primarily derived from the exchange feature.
4The filing includes the form of the Note as an exhibit.
5Legal opinions from Faegre Baker Daniels LLP and Sullivan & Cromwell LLP regarding the Notes are filed.
6This issuance represents a structured financial product linking Wells Fargo's debt to Apple Inc.'s equity performance.

WELLS FARGO & COMPANY/MN 8-K Report, Exhibit Filing (Apr 19, 2013)

Summary

Key Highlights

Frequently Asked Questions