What are 'Principal at Risk Securities' and what does it mean for investors?

'Principal at Risk Securities' are financial instruments where the repayment of the initial investment (principal) is not fully guaranteed. The principal amount you receive at maturity can be less than your original investment, depending on the performance of an underlying asset or index (in this case, the MSCI EAFE Index® or S&P 500® Index). Investors in these notes face both the credit risk of Wells Fargo and the market risk of the linked index.

What are the specific risks associated with these Medium-Term Notes?

The primary risks are market risk, as the principal repayment is linked to the performance of the MSCI EAFE Index® or S&P 500® Index, and credit risk, as the notes are obligations of Wells Fargo & Company. If the linked indices perform poorly, investors may lose a portion or all of their principal. Additionally, there's the risk that Wells Fargo may not be able to meet its obligations.

Where can I find more details about the terms and conditions of these notes?

The specific terms and conditions of these Medium-Term Notes, Series K, are detailed in the 'Form of Medium-Term Notes, Series K, Principal at Risk Securities' documents filed as exhibits to this 8-K. Additionally, legal opinions from Faegre Baker Daniels LLP and Davis Polk & Wardwell LLP are provided, which may offer further insights into the structure and implications of these notes.

Is this filing related to an offering or just a disclosure of existing notes?

This filing is primarily a disclosure of the issuance of the Medium-Term Notes, Series K. It indicates that these notes were issued on December 22, 2014. The filing also references a Registration Statement on Form S-3, suggesting that these notes were potentially offered under that registration.

WELLS FARGO & COMPANY/MN 8-K SEC Disclosure

Summary

This Form 8-K filing by Wells Fargo & Company on December 22, 2014, primarily serves to disclose the issuance of new financial instruments: Medium-Term Notes, Series K, Principal at Risk Securities. These notes are linked to either the MSCI EAFE Index® or the S&P 500® Index and have a maturity date of June 22, 2016. For investors, the key takeaway is that Wells Fargo is introducing structured products with principal-at-risk features. This implies that the repayment of principal could be affected by the performance of the linked stock market indices, in addition to the usual credit risk associated with the issuer. The filing includes the forms of these notes and legal opinions concerning their structure and tax implications.

Key Highlights

1Wells Fargo & Company issued new Medium-Term Notes, Series K, on December 22, 2014.
2These notes are 'Principal at Risk Securities', meaning principal repayment is contingent on index performance.
3The securities are linked to two major market indices: the MSCI EAFE Index® and the S&P 500® Index.
4The maturity date for these notes is June 22, 2016.
5The filing includes the official forms of the issued notes.
6Legal opinions from Faegre Baker Daniels LLP and Davis Polk & Wardwell LLP regarding the notes are also included.
7This issuance is related to a previously filed Registration Statement on Form S-3.

WELLS FARGO & COMPANY/MN 8-K Report, Exhibit Filing (Dec 22, 2014)

Summary

Key Highlights

Frequently Asked Questions