What are 'Principal at Risk Securities'?

'Principal at Risk Securities' are investment products where the return of principal is not guaranteed and is subject to the performance of an underlying asset, index, or other benchmark. In this case, the performance of the Energy Select Sector SPDR® Fund and the S&P 500® Index will determine the investor's return and the amount of principal repaid.

What is the risk associated with these new notes?

The primary risk is the potential loss of principal. If the underlying index (Energy Select Sector SPDR® Fund or S&P 500® Index) performs poorly, the investor may receive less than their initial investment back at maturity. The exact risk structure and potential for principal loss would be detailed in the full terms of the notes.

Why is Wells Fargo issuing these types of notes?

Wells Fargo, like many financial institutions, issues structured products such as these notes to offer investors potentially enhanced returns or customized exposure to specific market segments or indices. These offerings can also diversify the company's funding sources and product suite.

Where can I find the detailed terms and conditions of these notes?

The detailed terms and conditions of these notes are available in the exhibits filed with this 8-K filing. Specifically, Exhibit 4.1 contains the form of the note linked to the Energy Select Sector SPDR® Fund, and Exhibit 4.2 contains the form of the note linked to the S&P 500® Index. It is recommended to review these documents thoroughly for a complete understanding of the investment.

WELLS FARGO & COMPANY/MN 8-K SEC Disclosure

Summary

This 8-K filing by Wells Fargo & Company (WFC) on June 7, 2018, primarily serves to provide disclosures related to the issuance of new financial products. Specifically, the company is filing forms for two distinct series of Medium-Term Notes, Series S, which are described as "Principal at Risk Securities." These notes are linked to specific market indices: one to the Energy Select Sector SPDR® Fund, maturing in June 2021, and the other to the S&P 500® Index, maturing in June 2022. For investors, the key takeaway is the introduction of these new structured note products. The designation "Principal at Risk Securities" is crucial, signaling that the return and potentially the principal amount are tied to the performance of the underlying index. This implies a degree of investment risk beyond traditional fixed-income instruments. The filing also includes legal opinions and consents related to these notes, offering transparency on their structure and issuance.

Key Highlights

1Wells Fargo issued new "Medium-Term Notes, Series S, Principal at Risk Securities" on June 6, 2018.
2Two specific notes were issued: one linked to the Energy Select Sector SPDR® Fund (maturing June 7, 2021) and another linked to the S&P 500® Index (maturing June 7, 2022).
3The term "Principal at Risk Securities" indicates that investors could lose principal based on the performance of the linked index.
4The filing includes the forms of these notes as exhibits.
5Legal opinions from Faegre Baker Daniels LLP regarding these notes are also filed.
6The purpose of the filing is to comply with registration statement requirements for these new offerings.

WELLS FARGO & COMPANY/MN 8-K Report, Exhibit Filing (Jun 7, 2018)

Summary

Key Highlights

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