Filed Pursuant
to Rule 424(b)(2)
Registration Nos. 333-221324
and 333-221324-01
The information
in this preliminary pricing supplement is not complete and may be changed. This preliminary pricing supplement and the accompanying
market measure supplement, prospectus supplement and prospectus are not an offer to sell these securities and we are not soliciting
an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
Subject
To Completion, dated November 6, 2019
Pricing Supplement No. 231 dated November ,
2019 (To Market Measure Supplement dated May 18, 2018, Prospectus Supplement dated May 18, 2018 and Prospectus dated April 5, 2019)
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Wells Fargo Finance LLC
Medium-Term Notes, Series A
Fully and Unconditionally Guaranteed by
Wells Fargo & Company
ETF Linked Securities
$
Buffered Enhanced Return Securities
With Capped Upside and Buffered Downside
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(Principal at Risk Securities Linked to the iShares®
MSCI Emerging Markets ETF)
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Unlike ordinary debt securities, the securities
do not pay interest or repay a fixed amount of principal at maturity. Instead, the securities provide for a payment on the
stated maturity date (which will be set on the trade date and is expected to be the second scheduled business day following the
determination date) that may be greater than, equal to or less than the $1,000 face amount per security, depending on the performance
of the iShares® MSCI Emerging Markets ETF as measured from the trade date
to the determination date (expected to be within the range of 17 and 20 months following the trade date). If the value of the iShares®
MSCI Emerging Markets ETF appreciates, the securities offer 1.5 times participation in that appreciation, subject to the maximum
settlement amount (expected to be within the range of $1,212.40 to $1,249.30 for each $1,000 face amount security). If the
value of the iShares® MSCI Emerging Markets ETF declines by up to the buffer
amount of 10%, you will receive the face amount of your securities. However, if the value of the iShares®
MSCI Emerging Markets ETF declines by more than 10%, you will lose approximately 1.1111% of the face amount of your securities
at maturity for every 1% by which the decline is more than 10%. In exchange for the upside leverage and downside buffer features,
you must be willing to forgo (i) a return on the face amount of the securities in excess of the maximum return at maturity of 21.24%
to 24.93% (which results from the maximum settlement amount of $1,212.40 to $1,249.30 per $1,000 face amount security, to be set
on the trade date), (ii) interest on the securities and (iii) dividends paid on the shares of the iShares®
MSCI Emerging Markets ETF. You must also be willing to accept the risk that, if the value of the iShares® MSCI
Emerging Markets ETF declines by more than 10%, you will lose some, and possibly all, of the face amount of your securities
at maturity. All payments on the securities are subject to credit risk, and you will have no ability to pursue the shares of
the iShares® MSCI Emerging Markets ETF or any securities held by the iShares®
MSCI Emerging Markets ETF for payment. If Wells Fargo Finance LLC, as issuer, and Wells Fargo & Company, as guarantor, default
on their obligations, you could lose some or all of your investment.
To determine your payment at stated maturity,
we will calculate the underlier return, which is the percentage increase or decrease in the final underlier level on the determination
date from the initial underlier level (set on the trade date). On the stated maturity date, for each $1,000 face amount security:
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if the underlier return is positive (the final underlier level is greater than the initial underlier level),
you will receive an amount in cash equal to the sum of (i) $1,000 plus (ii) the product of (a) $1,000 times
(b) the upside participation rate of 1.5 times (c) the underlier return, subject to the maximum settlement amount;
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if the underlier return is zero or negative but not below -10% (the final underlier level is equal
to or less than the initial underlier level but not by more than 10%), you will receive $1,000; or
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if the underlier return is negative and is below -10% (the final underlier level is less than the initial
underlier level by more than 10%), you will lose approximately 1.1111% of the face amount of your securities for every 1% by which
the underlier return is below -10%. In this case, you will receive an amount in cash equal to the sum of (i) $1,000 plus
(ii) the product of (a) approximately 1.1111 times (b) the sum of the underlier return plus 10% times
(c) $1,000. This amount will be less than $1,000 and may be zero.
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The securities
will not be listed on any securities exchange and are designed to be held to maturity.
On the date
of this preliminary pricing supplement, the estimated value of the securities is approximately $995.75 per $1,000 face amount
security. While the estimated value of the securities on the trade date may differ from the estimated value set forth above, we
do not expect it to differ significantly absent a material change in market conditions or other relevant factors. In no event
will the estimated value of the securities on the trade date be less than $980.75 per $1,000 face amount security. The estimated
value of the securities was determined for us by Wells Fargo Securities, LLC using its proprietary pricing models. It is not an
indication of actual profit to us or to Wells Fargo Securities, LLC or any of our other affiliates, nor is it an indication of
the price, if any, at which Wells Fargo Securities, LLC or any other person may be willing to buy the securities from you at any
time after issuance. See “Estimated Value of the Securities” in this pricing supplement.
The securities
have complex features and investing in the securities involves risks not associated with an investment in conventional debt securities.
See “Risk Factors” herein on page PRS-9.
The securities
are the unsecured obligations of Wells Fargo Finance LLC, and, accordingly, all payments are subject to credit risk. If Wells
Fargo Finance LLC, as issuer, and Wells Fargo & Company, as guarantor, default on their obligations, you could lose some or
all of your investment. The securities are not savings accounts, deposits or other obligations of a depository institution and
are not insured by the Federal Deposit Insurance Corporation, the Deposit Insurance Fund or any other governmental agency.
Neither the
Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined
if this pricing supplement or the accompanying market measure supplement, prospectus supplement and prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.
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Original Offering Price
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Agent Discount(1)
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Proceeds to Wells Fargo Finance LLC
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Per Security
Total
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$1,000.00
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$0.00
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$1,000.00
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(1)
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Wells Fargo Securities, LLC, an affiliate of Wells Fargo Finance LLC and a wholly owned subsidiary of Wells Fargo & Company, is the agent for the distribution of the securities and is acting as principal. See “Terms of the Securities—Agent” and “Estimated Value of the Securities” in this pricing supplement for further information.
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Wells Fargo Securities
Terms of the Securities
Issuer:
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Wells Fargo Finance LLC.
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Guarantor:
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Wells Fargo & Company.
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Underlier:
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iShares® MSCI Emerging Markets ETF
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Original Issue Date
(settlement date):
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Expected to be the fifth scheduled business day following the trade date.
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Original Offering
Price:
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$1,000 per security.
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Face Amount:
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$1,000 per security. References in this pricing supplement to a “security” are to a security with a face amount of $1,000.
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Cash Settlement
Amount:
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On the stated maturity date, you will
be entitled to receive a cash payment per security in U.S. dollars equal to the cash settlement amount. The “cash settlement
amount” per security will equal:
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if the final underlier level is greater than or equal to the cap level, the maximum settlement amount;
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if the final underlier level is greater than the initial underlier level but less than the cap level, the
sum of (i) $1,000 plus (ii) the product of (a) $1,000 times (b) the upside participation rate times
(c) the underlier return;
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if the final underlier level is equal to or less than the initial underlier level but greater than
or equal to the buffer level, $1,000; or
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if the final underlier level is less than the buffer level, the sum of (i) $1,000 plus (ii) the product
of (a) the buffer rate times (b) the sum of the underlier return plus the buffer amount times (c) $1,000.
If the final underlier level is less
than the buffer level, you will lose some, and possibly all, of the face amount of your securities at maturity.
All calculations with respect to the cash
settlement amount will be rounded to the nearest one hundred-thousandth, with five one-millionths rounded upward (e.g., 0.000005
would be rounded to 0.00001); and the cash settlement amount will be rounded to the nearest cent, with one-half cent rounded upward.
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Stated Maturity
Date:
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The “stated maturity date” will be set on the trade date and is expected to be the second scheduled business day following the determination date. If the determination date is postponed, the stated maturity date will be postponed to the second business day after the determination date as postponed. See “—Determination Date” and “Additional Terms of the Securities—Market Disruption Events” for information about the circumstances that may result in a postponement of the determination date. If the stated maturity date is not a business day, any payment required to be made on the securities on the stated maturity date will be made on the next succeeding business day with the same force and effect as if it had been made on the stated maturity date. A “business day” means any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions are authorized or required by law or regulation to close in New York, New York. The securities are not subject to redemption by Wells Fargo Finance LLC or repayment at the option of any holder of the securities prior to the stated maturity date.
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Initial
Underlier Level:
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, the fund closing price of the underlier on the trade date.
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Final Underlier
Level:
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The “final underlier level” will be the fund closing price of the underlier on the determination date.
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Underlier Return:
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The “underlier return” will be the quotient of (i) the final underlier level minus the initial underlier level divided by (ii) the initial underlier level, expressed as a percentage.
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Maximum
Settlement
Amount:
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The “maximum settlement amount” will be set on the trade date and will be within the range of 121.24% to 124.93% of the face amount per security ($1,212.40 to $1,249.30 per security). As a result of the maximum settlement amount, the maximum return on the face amount of the securities at maturity will be 21.24% to 24.93% of the face amount.
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Cap Level:
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The “cap level” will be set on the trade date and will be within the range of 114.16% to 116.62% of the initial underlier level.
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Buffer Level:
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, which is equal to 90% of the initial underlier level.
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Buffer Rate:
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The “buffer rate” will be equal to the initial underlier level divided by the buffer level, or 100% divided by 90%, which is approximately 1.1111.
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Upside
Participation Rate:
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1.5
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Determination
Date:
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The determination date will be determined on the trade date and is scheduled to be between 17 and 20 months following the trade date. If the originally scheduled determination date is not a trading day, the determination date will be postponed to the next succeeding trading day. The determination date is also subject to postponement due to the occurrence of a market disruption event. See “Additional Terms of the Securities—Market Disruption Events.”
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Closing Price:
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The “closing price” for one share of the underlier (or one unit of any other security for which a closing price must be determined) on any trading day means the official closing price on such day published by the principal United States securities exchange registered under the Securities Exchange Act of 1934, as amended, on which the Fund (or any such other security) is listed or admitted to trading.
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Fund Closing Price:
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The “fund closing price” with respect to the underlier on any trading day means the product of (i) the closing price of one share of the underlier (or one unit of any other security for which a fund closing price must be determined) on such trading day and (ii) the adjustment factor applicable to the underlier on such trading day.
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Adjustment Factor:
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The “adjustment factor” means, with respect to a share of the underlier (or one unit of any other security for which a fund closing price must be determined), 1.0, subject to adjustment in the event of certain events affecting the shares of the underlier. See “Additional Terms of the Securities—Anti-dilution Adjustments Relating to the Underlier; Alternate Calculation” below.
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Calculation Agent:
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Wells Fargo Securities, LLC
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No Listing:
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The securities will not be listed on any securities exchange or automated quotation system.
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Material Tax
Consequences:
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For a discussion of the material U.S. federal income and certain estate tax consequences of the ownership and disposition of the securities, see “United States Federal Tax Considerations.”
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Agent:
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Wells Fargo Securities, LLC, an affiliate
of Wells Fargo Finance LLC and a wholly owned subsidiary of Wells Fargo & Company. The agent may resell the securities to other
securities dealers at the original offering price of the securities.
The agent or another affiliate of ours
expects to realize hedging profits projected by its proprietary pricing models to the extent it assumes the risks inherent in hedging
our obligations under the securities. If any dealer participating in the distribution of the securities or any of its affiliates
conducts hedging activities for us in connection with the securities, that dealer or its affiliate will expect to realize a profit
projected by its proprietary pricing models from such hedging activities. Any such projected profit will be in addition to any
discount or concession received in connection with the sale of the securities to you.
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Denominations:
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$1,000 and any integral multiple of $1,000.
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Additional Information about the Issuer, the
Guarantor and the Securities
You should read this pricing supplement
together with the market measure supplement dated May 18, 2018, the prospectus supplement dated May 18, 2018 and the prospectus
dated April 5, 2019 for additional information about the securities. When you read the accompanying market measure supplement and
prospectus supplement, please note that all references in such supplements to the prospectus dated April 27, 2018, or to any sections
therein, should refer instead to the accompanying prospectus dated April 5, 2019 or to the corresponding sections of such prospectus,
as applicable. Information included in this pricing supplement supersedes information in the market measure supplement, prospectus
supplement and prospectus to the extent it is different from that information. Certain defined terms used but not defined herein
have the meanings set forth in the prospectus supplement.
When we refer to “we,” “us”
or “our” in this pricing supplement, we refer only to Wells Fargo Finance LLC and not to any of its affiliates, including
Wells Fargo & Company.
You may access the market measure supplement,
prospectus supplement and prospectus on the SEC website www.sec.gov as follows (or if such address has changed, by reviewing our
filing for the relevant date on the SEC website):
Estimated Value of the Securities
The original offering price of each security
includes certain costs that are borne by you. Because of these costs, the estimated value of the securities on the trade date will
be less than the original offering price. The costs included in the original offering price relate to selling, structuring, hedging
and issuing the securities, as well as to our funding considerations for debt of this type.
The costs related to selling, structuring,
hedging and issuing the securities include (i) the agent discount (if any), (ii) the projected profit that our hedge counterparty
(which may be one of our affiliates or a dealer participating in the distribution of the securities) expects to realize for assuming
risks inherent in hedging our obligations under the securities and (iii) hedging and other costs relating to the offering of the
securities.
Our funding considerations take into account
the higher issuance, operational and ongoing management costs of market-linked debt such as the securities as compared to conventional
debt of Wells Fargo & Company of the same maturity, as well as our and our affiliates’ liquidity needs and preferences.
Our funding considerations are reflected in the fact that we determine the economic terms of the securities based on an assumed
rate that is generally lower than our internal funding rate, which is described below and is used in determining the estimated
value of the securities.
If the costs relating to selling, structuring,
hedging and issuing the securities were lower, or if the assumed rate we use to determine the economic terms of the securities
were higher, the economic terms of the securities would be more favorable to you and the estimated value would be higher. The estimated
value of the securities as of the trade date will be set forth in the final pricing supplement.
Determining the estimated value
Our affiliate, Wells Fargo Securities,
LLC (“WFS”), calculated the estimated value of the securities set forth on the cover page of this pricing supplement
based on its proprietary pricing models. Based on these pricing models and related market inputs and assumptions referred to in
this section below, WFS determined an estimated value for the securities by estimating the value of the combination of hypothetical
financial instruments that would replicate the payout on the securities, which combination consists of a non-interest bearing,
fixed-income bond (the “debt component”) and one or more derivative instruments underlying the economic terms
of the securities (the “derivative component”).
The estimated value of the debt component
is based on an internal funding rate that reflects, among other things, our and our affiliates’ view of the funding value
of the securities. This rate is used for purposes of determining the estimated value of the securities since we expect secondary
market prices, if any, for the securities that are provided by WFS or any of its affiliates to generally reflect such rate. WFS
determined the estimated value of the securities based on this internal funding rate, rather than the assumed rate that we use
to determine the economic terms of the securities, for the same reason.
WFS calculated the estimated value of
the derivative component based on a proprietary derivative-pricing model, which generated a theoretical price for the derivative
instruments that constitute the derivative component based on various inputs, including the “derivative component factors”
identified in “Risk Factors—The Value Of The Securities Prior To Stated Maturity Will Be Affected By Numerous Factors,
Some Of Which Are Related In Complex Ways.” These inputs may be market-observable or may be based on assumptions made by
WFS in its discretion.
The estimated value of the securities
determined by WFS is subject to important limitations. See “Risk Factors—The Estimated Value Of The Securities Is Determined
By Our Affiliate’s Pricing Models, Which May Differ From Those Of Other Dealers” and “Risk Factors—Our
And The Guarantor’s Economic Interests And Those Of Any Dealer Participating In The Offering Are Potentially Adverse To Your
Interests.”
Valuation of the securities after issuance
The estimated value of the securities
is not an indication of the price, if any, at which WFS or any other person may be willing to buy the securities from you in the
secondary market. The price, if any, at which WFS or any of its affiliates may purchase the securities in the secondary market
will be based upon WFS’s proprietary pricing models and will fluctuate over the term of the securities due to changes in
market conditions and other relevant factors. However, absent changes in these market conditions and other relevant factors, except
as otherwise described in the following paragraph, any secondary market price will be lower than the estimated value on the trade
date because the secondary market price will be reduced by a bid-offer spread, which may vary depending on the aggregate face amount
of the securities to be purchased in the secondary market transaction, and the expected cost of unwinding any related hedging transactions.
Accordingly, unless market conditions and other relevant factors change significantly in your favor, any secondary market price
for the securities is likely to be less than the original offering price.
If WFS or any of its affiliates makes
a secondary market in the securities at any time up to the original issue date or during the 3-month period following the trade
date, the secondary market price offered by WFS or any of its affiliates will be increased by an amount reflecting a portion of
the costs associated with selling, structuring, hedging and issuing the
securities that are included in the original offering price.
Because this portion of the costs is not fully deducted upon issuance, any secondary market price offered by WFS or any of its
affiliates during this period will be higher than it would be if it were based solely on WFS’s proprietary pricing models
less the bid-offer spread and hedging unwind costs described above. The amount of this increase in the secondary market price will
decline steadily to zero over this 3-month period. If you hold the securities through an account at WFS or any of its affiliates,
we expect that this increase will also be reflected in the value indicated for the securities on your brokerage account statement.
If WFS or any of its affiliates makes
a secondary market in the securities, WFS expects to provide those secondary market prices to any unaffiliated broker-dealers through
which the securities are held and to commercial pricing vendors. If you hold your securities through an account at a broker-dealer
other than WFS or any of its affiliates, that broker-dealer may obtain market prices for the securities from WFS (directly or indirectly),
but could also obtain such market prices from other sources, and may be willing to purchase the securities at any given time at
a price that differs from the price at which WFS or any of its affiliates is willing to purchase the securities. As a result, if
you hold your securities through an account at a broker-dealer other than WFS or any of its affiliates, the value of the securities
on your brokerage account statement may be different than if you held your securities at WFS or any of its affiliates.
The securities will not be listed or displayed
on any securities exchange or any automated quotation system. Although WFS and/or its affiliates may buy the securities from investors,
they are not obligated to do so and are not required to make a market for the securities. There can be no assurance that a secondary
market will develop.
Investor Considerations
We have designed the securities for investors
who:
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seek leveraged exposure at the upside participation rate to any upside performance of the underlier,
as measured by the extent (if any) to which the final underlier level is greater than the initial underlier level, subject to the
maximum settlement amount;
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desire payment of the face amount at maturity so long as the final underlier level is not less
than the initial underlier level by more than the buffer amount;
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desire to moderate any decline from the initial underlier level to the final underlier level in
excess of the buffer amount through the buffer feature;
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understand that the ability of the buffer feature to moderate any decline in the underlier in excess
of the buffer amount is progressively reduced as the final underlier level declines because they will be exposed on a leveraged
basis to any decline in the underlier in excess of the buffer amount;
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understand that if the final underlier level is less than the initial underlier level by more than
the buffer amount, they will be exposed to the decrease in the underlier from the initial underlier level, subject to the buffer
feature, and will lose some, and possibly all, of the face amount of the securities;
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are willing to forgo interest payments on the securities and dividends on shares of the underlier;
and
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are willing to hold the securities until maturity.
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The securities are not designed for, and
may not be a suitable investment for, investors who:
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seek a liquid investment or are unable or unwilling to hold the securities to maturity;
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are unwilling to accept the risk that the final underlier level may decrease from the initial underlier
level by more than the buffer amount;
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seek uncapped exposure to the upside performance of the underlier;
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seek certainty of receiving the face amount of the securities at stated maturity;
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are unwilling to purchase securities with an estimated value as of the trade date that is lower
than the original offering price and that may be as low as the lower estimated value set forth on the cover page;
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are unwilling to accept the risk of exposure to foreign emerging equity markets;
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seek exposure to the underlier but are unwilling to accept the risk/return trade-offs inherent
in the payment at stated maturity for the securities;
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are unwilling to accept the credit risk of Wells Fargo Finance LLC and Wells Fargo & Company
to obtain exposure to the underlier generally, or to the exposure to the underlier that the securities provide specifically; or
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prefer the lower risk of fixed income investments with comparable maturities issued by companies
with comparable credit ratings.
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Hypothetical Payout Profile
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The following profile is based on a hypothetical
maximum settlement amount of 123.085% of the face amount or $1,230.85 per security (the midpoint of the specified range for the
maximum settlement amount), an upside participation rate of 1.5, a buffer level equal to 90% of the initial underlier level, a
buffer rate of approximately 1.1111 and a buffer amount of 10%. This graph has been prepared for purposes of illustration only.
Your actual return will depend on the actual final underlier level, the actual maximum settlement amount and whether you hold your
securities to maturity.
Risk Factors
The securities have complex features and
investing in the securities will involve risks not associated with an investment in conventional debt securities. You should carefully
consider the risk factors set forth below as well as the other information contained in this pricing supplement and the accompanying
market measure supplement, prospectus supplement and prospectus, including the documents they incorporate by reference. As described
in more detail below, the value of the securities may vary considerably before the stated maturity date due to events that are
difficult to predict and are beyond our control. You should reach an investment decision only after you have carefully considered
with your advisors the suitability of an investment in the securities in light of your particular circumstances. The index underlying
the underlier, the MSCI Emerging Markets Index, is sometimes referred to as the “underlying index.”
You May Lose Up To All Of Your Investment.
We will not repay you a fixed amount on
the securities on the stated maturity date. The cash settlement amount will depend on the direction of and percentage change in
the final underlier level relative to the initial underlier level and the other terms of the securities. Because the price of the
underlier will be subject to market fluctuations, the cash settlement amount you receive may be more or less, and possibly significantly
less, than the original offering price of your securities.
If the final underlier level is less than
the initial underlier level by more than the buffer amount, the cash settlement amount will be less than the face amount per security
and you will be exposed on a leveraged basis to the decline in the underlier beyond the buffer amount. As a result, you may receive
less than, and possibly lose all of, the face amount per security at maturity even if the price of the underlier is greater than
or equal to the initial underlier level or the buffer level at certain points during the term of the securities.
Even if the final underlier level is greater
than the initial underlier level, the amount you receive at stated maturity may only be slightly greater than the face amount,
and your yield on the securities may be less than the yield you would earn if you bought a traditional interest-bearing debt security
of Wells Fargo Finance LLC or another issuer with a similar credit rating with the same stated maturity date.
Your Return Will Be Limited By The
Maximum Settlement Amount And May Be Lower Than The Return On A Direct Investment In The Underlier.
Your return on the securities will be
subject to a maximum settlement amount. The opportunity to participate in the possible increases in the price of the underlier
through an investment in the securities will be limited because the cash settlement amount will not exceed the maximum settlement
amount. Furthermore, the effect of the upside participation rate will be progressively reduced for all final underlier levels exceeding
the final underlier level at which the maximum settlement amount is reached, which we refer to as the cap level.
No Periodic Interest Will Be Paid On
The Securities.
No periodic payments of interest will
be made on the securities. However, if the agreed-upon tax treatment is successfully challenged by the Internal Revenue Service
(the “IRS”), you may be required to recognize taxable income over the term of the securities. You should review
the section of this pricing supplement entitled “United States Federal Tax Considerations.”
The Stated Maturity Date Of The Securities
Is A Pricing Term And Will Be Determined By Us On The Trade Date.
We will not fix the stated maturity date
until the trade date. The stated maturity date is expected to be the second scheduled business day following the determination
date. Therefore, the term of the securities could be as short as the low end of the range and as long as the high end of the range
for the determination date set forth on the cover page. You should be willing to hold your securities for up to the high end of
the range set forth on the cover page. The stated maturity date selected by us could have an impact on the value of the securities.
The Securities Are Subject To Credit
Risk.
The securities are our obligations, are
fully and unconditionally guaranteed by the Guarantor and are not, either directly or indirectly, an obligation of any other third
party. Any amounts payable under the securities are subject to creditworthiness, and you will have no ability to pursue the shares
of the underlier or any securities held by the underlier for payment. As a result, our and the Guarantor’s actual and perceived
creditworthiness may affect the value of the securities and, in the event we and the Guarantor were to default on the obligations
under the securities and the guarantee, you may not receive any amounts owed to you under the terms of the securities.
As A Finance Subsidiary, We Have No
Independent Operations And Will Have No Independent Assets.
As a finance subsidiary, we have no independent
operations beyond the issuance and administration of our securities and will have no independent assets available for distributions
to the holders of our securities if they make claims in respect of such securities in a bankruptcy, resolution or similar proceeding.
Accordingly, any recoveries by such holders will be
limited to those available under the related guarantee by the Guarantor and
that guarantee will rank pari passu with all other unsecured, unsubordinated obligations of the Guarantor. Holders will
have recourse only to a single claim against the Guarantor and its assets under the guarantee. Holders of the securities should
accordingly assume that in any such proceedings they would not have any priority over and should be treated pari passu with
the claims of other unsecured, unsubordinated creditors of the Guarantor, including holders of unsecured, unsubordinated debt securities
issued by the Guarantor.
Holders Of The Securities Have Limited
Rights Of Acceleration.
Payment of principal on the securities
may be accelerated only in the case of payment defaults that continue for a period of 30 days, certain events of bankruptcy or
insolvency relating to Wells Fargo Finance LLC only, whether voluntary or involuntary, certain situations under which the guarantee
ceases to be in full force and effect or if the Guarantor denies or disaffirms its obligations under the guarantee. If you purchase
the securities, you will have no right to accelerate the payment of principal on the securities if we fail in the performance of
any of our obligations under the securities, other than the obligations to pay principal and interest on the securities. See “Description
of Debt Securities of Wells Fargo Finance LLC—Events of Default and Covenant Breaches” in the accompanying prospectus.
Holders Of The Securities Could Be
At Greater Risk For Being Structurally Subordinated If Either We Or The Guarantor Convey, Transfer Or Lease All Or Substantially
All Of Our Or Its Assets To One Or More Of The Guarantor’s Subsidiaries.
Under the indenture, we may convey, transfer
or lease all or substantially all of our assets to one or more of the Guarantor’s subsidiaries. Similarly, the Guarantor
may convey, transfer or lease all or substantially all of its assets to one or more of its subsidiaries. In either case, third-party
creditors of the Guarantor’s subsidiaries would have additional assets from which to recover on their claims while holders
of the securities would be structurally subordinated to creditors of the Guarantor’s subsidiaries with respect to such assets.
See “Description of Debt Securities of Wells Fargo Finance LLC—Consolidation, Merger or Sale” in the accompanying
prospectus.
The Securities Will Not Have The Benefit
Of Any Cross-Default Or Cross-Acceleration With Other Indebtedness Of The Guarantor; Events Of Bankruptcy, Insolvency, Receivership
Or Liquidation Relating To The Guarantor And Failure By The Guarantor To Perform Any Of Its Covenants Or Warranties (Other Than
A Payment Default Under The Guarantee) Will Not Constitute An Event Of Default With Respect To The Securities.
The securities will not have the benefit
of any cross-default or cross-acceleration with other indebtedness of the Guarantor. In addition, events of bankruptcy, insolvency,
receivership or liquidation relating to the Guarantor and failure by the Guarantor to perform any of its covenants or warranties
(other than a payment default under the guarantee) will not constitute an event of default with respect to the securities.
The Estimated Value Of The Securities
On The Trade Date, Based On WFS’s Proprietary Pricing Models, Will Be Less Than The Original Offering Price.
The original offering price of the securities
includes certain costs that are borne by you. Because of these costs, the estimated value of the securities on the trade date will
be less than the original offering price. The costs included in the original offering price relate to selling, structuring, hedging
and issuing the securities, as well as to our funding considerations for debt of this type. The costs related to selling, structuring,
hedging and issuing the securities include (i) the agent discount (if any), (ii) the projected profit that our hedge counterparty
(which may be one of our affiliates or a dealer participating in the distribution of the securities) expects to realize for assuming
risks inherent in hedging our obligations under the securities and (iii) hedging and other costs relating to the offering of the
securities. Our funding considerations are reflected in the fact that we determine the economic terms of the securities based on
an assumed rate that is generally lower than our internal funding rate, which is described above under "Estimated Value of
the Securities—Determining the estimated value." If the costs relating to selling, structuring, hedging and issuing
the securities were lower, or if the assumed rate we use to determine the economic terms of the securities were higher, the economic
terms of the securities would be more favorable to you and the estimated value would be higher.
The Estimated Value Of The Securities
Is Determined By Our Affiliate’s Pricing Models, Which May Differ From Those Of Other Dealers.
The estimated value of the securities
was determined for us by WFS using its proprietary pricing models and related market inputs and assumptions referred to above under
“Estimated Value of the Securities—Determining the estimated value.” Certain inputs to these models may be determined
by WFS in its discretion. WFS’s views on these inputs may differ from other dealers’ views, and WFS’s estimated
value of the securities may be higher, and perhaps materially higher, than the estimated value of the securities that would be
determined by other dealers in the market. WFS’s models and its inputs and related assumptions may prove to be wrong and
therefore not an accurate reflection of the value of the securities.
The Estimated Value Of The Securities
Is Not An Indication Of The Price, If Any, At Which WFS Or Any Other Person May Be Willing To Buy The Securities From You In The
Secondary Market.
The price, if any, at which WFS or any
of its affiliates may purchase the securities in the secondary market will be based on WFS’s proprietary pricing models and
will fluctuate over the term of the securities as a result of changes in the market and other factors described in the next risk
factor. Any such secondary market price for the securities will also be reduced by a bid-offer spread, which may vary depending
on the aggregate face amount of the securities to be purchased in the secondary market transaction, and the expected cost of unwinding
any related hedging transactions. Unless the factors described in the next risk factor change significantly in your favor, any
such secondary market price for the securities is likely to be less than the original offering price.
If WFS or any of its affiliates makes
a secondary market in the securities at any time up to the original issue date or during the 3-month period following the trade
date, the secondary market price offered by WFS or any of its affiliates will be increased by an amount reflecting a portion of
the costs associated with selling, structuring, hedging and issuing the securities that are included in the original offering price.
Because this portion of the costs is not fully deducted upon issuance, any secondary market price offered by WFS or any of its
affiliates during this period will be higher than it would be if it were based solely on WFS’s proprietary pricing models
less the bid-offer spread and hedging unwind costs described above. The amount of this increase in the secondary market price will
decline steadily to zero over this 3-month period. If you hold the securities through an account at WFS or any of its affiliates,
we expect that this increase will also be reflected in the value indicated for the securities on your brokerage account statement.
If you hold your securities through an account at a broker-dealer other than WFS or any of its affiliates, the value of the securities
on your brokerage account statement may be different than if you held your securities at WFS or any of its affiliates, as discussed
above under “Estimated Value of the Securities—Valuation of the securities after issuance.”
The Value Of The Securities Prior To
Stated Maturity Will Be Affected By Numerous Factors, Some Of Which Are Related In Complex Ways.
The value of the securities prior to stated
maturity will be affected by the price of the underlier at that time, interest rates at that time and a number of other factors,
some of which are interrelated in complex ways. The effect of any one factor may be offset or magnified by the effect of another
factor. The following factors, which we refer to as the “derivative component factors,” are expected to affect
the value of the securities. When we refer to the “value” of your security, we mean the value that you could
receive for your security if you are able to sell it in the open market before the stated maturity date.
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Underlier Performance. The value of the securities prior to maturity will depend substantially
on the then-current price of the underlier. The price at which you may be able to sell the securities before stated maturity may
be at a discount, which could be substantial, from their original offering price, if the price of the underlier at such time is
less than, equal to or not sufficiently above the initial underlier level.
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Interest Rates. The value of the securities may be affected by changes in the interest rates
in the U.S. markets.
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Volatility Of The Underlier. Volatility is the term used to describe the size and frequency
of market fluctuations. The value of the securities may be affected if the volatility of the underlier changes.
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Time Remaining To Maturity. The value of the securities at any given time prior to maturity
will likely be different from that which would be expected based on the then-current price of the underlier. This difference will
most likely reflect a discount due to expectations and uncertainty concerning the price of the underlier during the period of time
still remaining to the stated maturity date. In general, as the time remaining to maturity decreases, the value of the securities
will approach the amount that could be payable at maturity based on the then-current price of the underlier.
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Dividend Yields On The Securities Included In The Underlier. The value of the securities
may be affected by the dividend yields on securities held by the underlier (the amount of such dividends may influence the closing
price of the shares of the underlier).
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Currency Exchange Rates. Because the underlier includes securities quoted in one or more
foreign currencies and the closing price of the underlier is based on the U.S. dollar value of such securities, the value of the
securities may be affected if the exchange rate between the U.S. dollar and any such foreign currency changes.
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In addition to the derivative component
factors, the value of the securities will be affected by actual or anticipated changes in our and the Guarantor’s creditworthiness.
You should understand that the impact of one of the factors specified above, such as a change in interest rates, may offset some
or all of any change in the value of the securities attributable to another factor, such as a change in the price of the underlier.
Because several factors are expected to affect the value of the securities, changes in the price of the underlier may not result
in a comparable change in the value of the securities. We anticipate that the value of the securities will always be at a discount
to the maximum settlement amount.
The Securities Will Not Be Listed On
Any Securities Exchange And We Do Not Expect A Trading Market For The Securities To Develop.
The securities will not be listed or displayed
on any securities exchange or any automated quotation system. Although the agent and/or its affiliates may purchase the securities
from holders, they are not obligated to do so and are not required to make a market for the securities. There can be no assurance
that a secondary market will develop. Because we do not expect that any market makers will participate in a secondary market for
the securities, the price at which you may be able to sell your securities is likely to depend on the price, if any, at which the
agent is willing to buy your securities.
If a secondary market does exist, it may
be limited. Accordingly, there may be a limited number of buyers if you decide to sell your securities prior to stated maturity.
This may affect the price you receive upon such sale. Consequently, you should be willing to hold the securities to stated maturity.
Your Return On The Securities Could
Be Less Than If You Owned The Shares Of The Underlier.
Your return on the securities will not
reflect the return you would realize if you actually owned the shares of the underlier. This is in part because the cash settlement
amount payable at stated maturity will be determined by reference only to the closing price of a share of the underlier without
taking into consideration the value of dividends and other distributions paid on such share. In addition, the cash settlement amount
will not be greater than the maximum settlement amount.
Historical Prices Of The Underlier
Or The Securities Included In The Underlier Should Not Be Taken As An Indication Of The Future Performance Of The Underlier During
The Term Of The Securities.
The trading price of the shares of the
underlier will determine the cash settlement amount payable at maturity to you. As a result, it is impossible to predict whether
the fund closing price of the underlier will fall or rise compared to the initial underlier level. The trading price of the shares
of the underlier will be influenced by complex and interrelated political, economic, financial and other factors that can affect
the markets in which the underlier and the securities comprising the underlier are traded and the values of the underlier and such
securities. Accordingly, any historical prices of the underlier do not provide an indication of the future performance of the underlier.
Changes That Affect The Underlier Or
The Underlying Index May Adversely Affect The Value Of The Securities And The Amount You Will Receive At Stated Maturity.
The policies of the sponsor of the underlier
(the “underlier sponsor”) concerning the calculation of the underlier’s net asset value, additions, deletions
or substitutions of securities in the underlier and the manner in which changes in the underlying index are reflected in the underlier,
and changes in those policies, could affect the closing price of the shares of the underlier and, therefore, may affect the value
of the securities and the cash settlement amount payable at maturity. Similarly, the policies of the sponsor of the underlying
index (the “underlying index sponsor”) concerning the calculation of the underlying index and the addition,
deletion or substitution of securities comprising the underlying index and the manner in which the underlying index sponsor takes
account of certain changes affecting such securities may affect the level of the underlying index and the closing price of the
shares of the underlier and, therefore, may affect the value of the securities and the cash settlement amount payable at maturity.
The underlying index sponsor could also discontinue or suspend calculation or dissemination of the underlying index or materially
alter the methodology by which it calculates the underlying index. Any such actions could adversely affect the value of the securities.
We Cannot Control Actions By Any Of
The Unaffiliated Companies Whose Securities Are Included In The Underlier Or The Underlying Index.
Actions by any company whose securities
are included in the underlier or in the underlying index may have an adverse effect on the price of its security, the final underlier
level and the value of the securities. We are not affiliated with any company whose security is represented in the underlier or
the underlying index. These companies will not be involved in the offering of the securities and will have no obligations with
respect to the securities, including any obligation to take our or your interests into consideration for any reason. These companies
will not receive any of the proceeds of the offering of the securities and will not be responsible for, and will not have participated
in, the determination of the timing of, prices for, or quantities of, the securities to be issued. These companies will not be
involved with the administration, marketing or trading of the securities and will have no obligations with respect to any amounts
to be paid to you on the securities.
We And Our Affiliates Have No Affiliation
With The Underlier Sponsor Or The Underlying Index Sponsor And Have Not Independently Verified Their Public Disclosure Of Information.
We and our affiliates are not affiliated
in any way with the underlier sponsor or the underlying index sponsor (collectively, the “sponsors”) and have
no ability to control or predict their actions, including any errors in or discontinuation of disclosure regarding their methods
or policies relating to the management or calculation of the underlier or underlying index. We have derived the information about
the sponsors and the underlier and underlying index contained in this pricing supplement
and the accompanying market measure supplement
from publicly available information, without independent verification. You, as an investor in the securities, should make your
own investigation into the underlier, the underlying index and the sponsors. The sponsors will not be involved in the offering
of the securities made hereby in any way and the sponsors do not have any obligation to consider your interest as an owner of the
securities in taking any actions that might affect the value of the securities.
An Investment Linked To The Shares
Of The Underlier Is Different From An Investment Linked To The Underlying Index.
The performance of the shares of the underlier
may not exactly replicate the performance of the underlying index because the underlier may not invest in all of the securities
included in the underlying index and because the underlier will reflect transaction costs and fees that are not included in the
calculation of the underlying index. The underlier may also hold securities or derivative financial instruments not included in
the underlying index. It is also possible that the underlier may not fully replicate the performance of the underlying index due
to the temporary unavailability of certain securities in the secondary market or due to other extraordinary circumstances. In addition,
because the shares of the underlier are traded on a securities exchange and are subject to market supply and investor demand, the
value of a share of the underlier may differ from the net asset value per share of the underlier. As a result, the performance
of the underlier may not correlate perfectly with the performance of the underlying index, and the return on the securities based
on the performance of the underlier will not be the same as the return on securities based on the performance of the underlying
index.
There Are Risks Associated With The
Underlier.
Although the shares of the underlier are
listed for trading on a United States securities exchange and a number of similar products have been traded on such securities
exchange for varying periods of time, there is no assurance that an active trading market will continue for the shares of the underlier
or that there will be liquidity in the trading market.
In addition, the underlier is subject
to management risk, which is the risk that the underlier sponsor’s investment strategy, the implementation of which is subject
to a number of constraints, may not produce the intended results. For example, the underlier sponsor may select up to 10% of the
underlier’s assets to be invested in shares of equity securities that are not included in the underlying index. The underlier
is also not actively managed and may be affected by a general decline in market segments relating to the underlying index. Further,
the underlier sponsor invests in securities included in, or representative of, the underlying index regardless of their investment
merits, and the underlier sponsor does not attempt to take defensive positions in declining markets.
The underlier is also subject to custody
risk, which refers to the risks in the process of clearing and settling trades and to the holding of securities by local banks,
agent and depositories. Low trading volumes and volatile prices in less developed markets make trades harder to complete and settle,
and governments or trade groups may compel local agents to hold securities in designated depositories that are not subject to independent
evaluation. The less developed a country’s securities market is, the greater the likelihood of custody problems.
Further, under continuous listing standards
adopted by the relevant securities exchange, the underlier will be required to confirm on an ongoing basis that the securities
included in the underlying index satisfy the applicable listing requirements. In the event that the underlying index does not comply
with the applicable listing requirements, the underlier would be required to rectify such non-compliance by requesting that the
underlying index sponsor modify such underlying index, transitioning to a new underlying index or obtaining relief from the SEC.
There can be no assurance that the underlying index sponsor would modify the underlying index or that relief would be obtained
from the SEC and, therefore, non-compliance with the continuous listing standards may result in the underlier being delisted by
the relevant securities exchange.
If the underlier were delisted by the
relevant securities exchange, the calculation agent would select a successor underlier or, if no successor underlier is available,
would determine the fund closing price of the underlier on any date of determination.
These risks may adversely affect the price
of the shares of the underlier and, consequently, the value of the securities.
You Will Not Have Any Shareholder Rights
With Respect To The Shares Of The Underlier.
You will not become a holder of shares
of the underlier or a holder of securities included in the underlying index as a result of owning a security. You will not have
any voting rights, any right to receive dividends or other distributions or any other rights with respect to such shares or securities.
At stated maturity, you will have no right to receive delivery of any shares or securities.
Anti-dilution Adjustments Relating
To The Shares Of The Underlier Do Not Address Every Event That Could Affect Such Shares.
An adjustment factor, as described herein,
will be used to determine the final underlier level of the underlier. The adjustment factor will be adjusted by the calculation
agent for certain events affecting the shares of the underlier. However, the calculation agent will not make an adjustment for
every event that could affect such shares. If an event occurs that does not require the calculation agent to adjust the adjustment
factor, the value of the securities may be adversely affected.
An Investment In The Securities Is
Subject To Risks Associated With Foreign Securities Markets.
The underlier includes the securities
of foreign companies and you should be aware that investments in securities linked to the value of foreign equity securities involve
particular risks. Foreign securities markets may have less liquidity and may be more volatile than the U.S. securities markets,
and market developments may affect foreign markets differently than U.S. securities markets. Direct or indirect government intervention
to stabilize a foreign securities market, as well as cross-shareholdings in foreign companies, may affect trading prices and volumes
in those markets. Also, there is generally less publicly available information about non-U.S. companies that are not subject to
the reporting requirements of the Securities and Exchange Commission, and non-U.S. companies are subject to accounting, auditing
and financial reporting standards and requirements that differ from those applicable to U.S. reporting companies.
The prices and performance of securities
of non-U.S. companies are subject to political, economic, financial, military and social factors which could negatively affect
foreign securities markets, including the possibility of recent or future changes in a foreign government’s economic, monetary
and fiscal policies, the possible imposition of, or changes in, currency exchange laws or other laws or restrictions applicable
to foreign companies or investments in foreign equity securities, the possibility of imposition of withholding taxes on dividend
income, the possibility of fluctuations in the rate of exchange between currencies, the possibility of outbreaks of hostility or
political instability and the possibility of natural disaster or adverse public health developments. Moreover, the relevant non-U.S.
economies may differ favorably or unfavorably from the U.S. economy in important respects, such as growth of gross national product,
rate of inflation, trade surpluses or deficits, capital reinvestment, resources and self-sufficiency.
In addition, the underlier includes companies
in countries with emerging markets. Countries with emerging markets may have relatively unstable governments, may present the risks
of nationalization of businesses, restrictions on foreign ownership and prohibitions on the repatriation of assets, and may have
less protection of property rights than more developed countries. The economies of countries with emerging markets may be based
on only a few industries, may be highly vulnerable to changes in local or global trade conditions (due to economic dependence upon
commodity prices and international trade), and may suffer from extreme and volatile debt burdens, currency devaluations or inflation
rates. Local securities markets may trade a small number of securities and may be unable to respond effectively to increases in
trading volume, potentially making prompt liquidation of holdings difficult or impossible at times.
The securities included in the underlier
may be listed on a foreign stock exchange. A foreign stock exchange may impose trading limitations intended to prevent extreme
fluctuations in individual security prices and may suspend trading in certain circumstances. These actions could limit variations
in the closing price of the underlier which could, in turn, adversely affect the value of the securities.
Exchange Rate Movements May Impact
The Value Of The Securities.
The securities will be denominated in
U.S. dollars. Since the value of securities included in the underlier is quoted in a currency other than U.S. dollars and, as per
the underlier, is converted into U.S. dollars, the amount payable on the securities on the stated maturity date will depend in
part on the relevant exchange rates.
The Stated Maturity Date Will Be Postponed
If The Determination Date Is Postponed.
The determination date will be postponed
if the calculation agent determines that a market disruption event has occurred or is continuing on the determination date or if
the originally scheduled determination date is not a trading day. If such a postponement occurs, the stated maturity date will
be postponed until two business days after the postponed determination date.
Our And The Guarantor’s Economic
Interests And Those Of Any Dealer Participating In The Offering Are Potentially Adverse To Your Interests.
You should be aware of the following ways
in which our and the Guarantor’s economic interests and those of any dealer participating in the distribution of the securities,
which we refer to as a “participating dealer,” are potentially adverse to your interests as an investor in the securities.
In engaging in certain of the activities described below, our affiliates or any participating dealer or its affiliates may take
actions that may adversely affect the value of and your return on the
securities, and in so doing they will have no obligation
to consider your interests as an investor in the securities. Our affiliates or any participating dealer or its affiliates may realize
a profit from these activities even if investors do not receive a favorable investment return on the securities.
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The calculation agent is our affiliate and may be required to make discretionary judgments
that affect the return you receive on the securities. WFS, which is our affiliate, will be the calculation agent for the
securities. As calculation agent, WFS will determine the final underlier level and may be required to make other determinations
that affect the return you receive on the securities at maturity. In making these determinations, the calculation agent may be
required to make discretionary judgments, including determining whether a market disruption event has occurred on the scheduled
determination date, which may result in postponement of the determination date; determining the final underlier level if the determination
date is postponed to the last day to which it may be postponed and a market disruption event occurs on that day; adjusting the
adjustment factor and other terms of the securities in certain circumstances; if the underlier undergoes a liquidation event, selecting
a successor underlier or, if no successor underlier is available, determining the final underlier level; and determining whether
to adjust the closing price of the underlier on the determination date in the event of certain changes in or modifications to the
underlier or the underlying index. In making these discretionary judgments, the fact that WFS is our affiliate may cause it to
have economic interests that are adverse to your interests as an investor in the securities, and WFS’s determinations as
calculation agent may adversely affect your return on the securities.
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The estimated value of the securities was calculated by our affiliate and is therefore not
an independent third-party valuation. WFS calculated the estimated value of the securities set forth on the cover page
of this pricing supplement, which involved discretionary judgments by WFS, as described under “Risk Factors—The Estimated
Value Of The Securities Is Determined By Our Affiliate’s Pricing Models, Which May Differ From Those Of Other Dealers”
above. Accordingly, the estimated value of the securities set forth on the cover page of this pricing supplement is not an independent
third-party valuation.
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Research reports by our affiliates or any participating dealer or its affiliates may be inconsistent
with an investment in the securities and may adversely affect the price of the underlier. Our affiliates or any dealer
participating in the offering of the securities or its affiliates may, at present or in the future, publish research reports on
the underlier or the underlying index or the companies whose securities are included in the underlier or the underlying index.
This research is modified from time to time without notice and may, at present or in the future, express opinions or provide recommendations
that are inconsistent with purchasing or holding the securities. Any research reports on the underlier or the underlying index
or the companies whose securities are included in the underlier or the underlying index could adversely affect the price of the
underlier and, therefore, adversely affect the value of and your return on the securities. You are encouraged to derive information
concerning the underlier from multiple sources and should not rely on the views expressed by us or our affiliates or any participating
dealer or its affiliates. In addition, any research reports on the underlier or the underlying index or the companies whose securities
are included in the underlier or the underlying index published on or prior to the trade date could result in an increase in the
price of the underlier on the trade date, which would adversely affect investors in the securities by increasing the price at which
the underlier must close on the determination date in order for investors in the securities to receive a favorable return.
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Business activities of our affiliates or any participating dealer or its affiliates with
the companies whose securities are included in the underlier may adversely affect the price of the underlier. Our affiliates
or any participating dealer or its affiliates may, at present or in the future, engage in business with the companies whose securities
are included in the underlier or the underlying index, including making loans to those companies (including exercising creditors’
remedies with respect to such loans), making equity investments in those companies or providing investment banking, asset management
or other advisory services to those companies. These business activities could adversely affect the price of the underlier and,
therefore, adversely affect the value of and your return on the securities. In addition, in the course of these business activities,
our affiliates or any participating dealer or its affiliates may acquire non-public information about one or more of the companies
whose securities are included in the underlier or the underlying index. If our affiliates or any participating dealer or its affiliates
do acquire such non-public information, we and they are not obligated to disclose such non-public information to you.
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Hedging activities by our affiliates or any participating dealer or its affiliates may adversely
affect the price of the underlier. We expect to hedge our obligations under the securities through one or more hedge counterparties
which may include our affiliates or any participating dealer or its affiliates. Pursuant to such hedging activities, our hedge
counterparties may acquire shares of the underlier, securities included in the underlier or the underlying index or listed or over-the-counter
derivative or synthetic instruments related to the underlier or such securities. Depending on, among other things, future market
conditions, the aggregate amount and the composition of such positions are likely to vary over time. To the extent that our hedge
counterparties have a long hedge position in shares of the underlier or any of the securities included in the underlier or the
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underlying index, or derivative or synthetic instruments related to the underlier or such securities, they may liquidate a portion
of such holdings at or about the time of the determination date or at or about the time of a change in the securities included
in the underlier or the underlying index. These hedging activities could potentially adversely affect the price of the underlier
and, therefore, adversely affect the value of and your return on the securities.
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Trading activities by our affiliates or any participating dealer or its affiliates may adversely
affect the price of the underlier. Our affiliates or any participating dealer or its affiliates may engage in trading in
the shares of the underlier or the securities included in the underlier or the underlying index and other instruments relating
to the underlier or such securities on a regular basis as part of their general broker-dealer and other businesses. Any of these
trading activities could potentially adversely affect the price of the underlier and, therefore, adversely affect the value of
and your return on the securities.
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A participating dealer or its affiliates may realize hedging profits projected by its proprietary
pricing models in addition to any selling concession, creating a further incentive for the participating dealer to sell the securities
to you. If any participating dealer or any of its affiliates conducts hedging activities for us in connection with the
securities, that participating dealer or its affiliates will expect to realize a projected profit from such hedging activities.
If a participating dealer receives a concession for the sale of the securities to you, this projected hedging profit will be in
addition to the concession, creating a further incentive for the participating dealer to sell the securities to you.
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The U.S. Federal Tax Consequences Of
An Investment In The Securities Are Unclear.
There is no direct legal authority regarding
the proper U.S. federal tax treatment of the securities, and we do not plan to request a ruling from the IRS. Consequently, significant
aspects of the tax treatment of the securities are uncertain, and the IRS or a court might not agree with the treatment of the
securities as prepaid derivative contracts that are “open transactions” for U.S. federal income tax purposes. If the
IRS were successful in asserting an alternative treatment of the securities, the tax consequences of the ownership and disposition
of the securities might be materially and adversely affected. Even if the treatment of the securities as prepaid derivative contracts
that are “open transactions” is respected, a security may be treated as a “constructive ownership transaction,”
with potentially adverse consequences described below under “United States Federal Tax Considerations.”
Furthermore, Section 871(m) of the Internal
Revenue Code of 1986, as amended (the “Code”), imposes a withholding tax of up to 30% on “dividend equivalents”
paid or deemed paid to non-U.S. investors in respect of certain financial instruments linked to U.S. equities. In light of Treasury
regulations, as modified by an IRS notice,that provide a general exemption for financial instruments issued prior to January 1,
2021 that do not have a “delta” of one, as of the date of this preliminary pricing supplement the securities should
not be subject to withholding under Section 871(m). However, information about the application of Section 871(m) to the securities
will be updated in the final pricing supplement. Moreover, the IRS could challenge a conclusion that the securities should not
be subject to withholding under Section 871(m). If withholding applies to the securities, we will not be required to pay any additional
amounts with respect to amounts withheld.
In addition, in 2007 the U.S. Treasury
Department and the IRS released a notice requesting comments on various issues regarding the U.S. federal income tax treatment
of “prepaid forward contracts” and similar instruments. Any Treasury regulations or other guidance promulgated after
consideration of these issues could materially and adversely affect the tax consequences of an investment in the securities, including
the character and timing of income or loss and the degree, if any, to which income realized by non-U.S. persons should be subject
to withholding tax, possibly with retroactive effect. You should read carefully the discussion under “United States Federal
Tax Considerations” in this pricing supplement. You should also consult your tax adviser regarding the U.S. federal tax consequences
of an investment in the securities, as well as tax consequences arising under the laws of any state, local or non-U.S. taxing jurisdiction.
Determining Payment at Stated Maturity
On the stated maturity date, you will
receive a cash payment per security (the cash settlement amount) calculated as follows:
Hypothetical Returns
The following table illustrates, for a
hypothetical maximum settlement amount of 123.085% of the face amount or $1,230.85 per security (the midpoint of the specified
range of the maximum settlement amount) and a range of hypothetical final underlier levels:
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the hypothetical percentage change from the hypothetical initial underlier level to the hypothetical
final underlier level; and
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the hypothetical pre-tax total return.
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Hypothetical underlier return
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Hypothetical pre-tax total
return
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The above figures are for purposes of
illustration only and may have been rounded for ease of analysis. The actual amount you receive at stated maturity and the resulting
pre-tax return will depend on the actual final underlier level and maximum settlement amount.
If, for example, the underlier return
were determined to be -75.00%, the pre-tax return on your securities at maturity would be approximately -72.222%, as shown in the
table above. As a result, if you purchased your securities on the original issue date at the face amount and held them to the stated
maturity date, you would lose approximately 72.222% of your investment. In addition, if the underlier return were determined to
be 50.00%, the cash settlement amount that we would deliver on your securities at maturity would be capped at the maximum settlement
amount, and the pre-tax return on your securities would therefore be capped at 23.085%, as shown in the table above. As a result,
if you held your securities to the stated maturity date, you would not benefit from any underlier return in excess of 15.39%.
Additional Terms of the Securities
Wells Fargo Finance LLC will issue the
securities as part of a series of senior unsecured debt securities entitled “Medium-Term Notes, Series A,” which is
more fully described in the prospectus supplement. Information included in this pricing supplement supersedes information in the
market measure supplement, prospectus supplement and prospectus to the extent that it is different from that information.
Certain Definitions
A “trading day” means
a day, as determined by the calculation agent, on which the relevant stock exchange and each related futures or options exchange
with respect to the underlier or any successor thereto, if applicable, are scheduled to be open for trading for their respective
regular trading sessions.
The “relevant stock exchange”
for the underlier means the primary exchange or quotation system on which shares (or other applicable securities) of the underlier
are traded, as determined by the calculation agent.
The “related futures or options
exchange” for the underlier means each exchange or quotation system where trading has a material effect (as determined
by the calculation agent) on the overall market for futures or options contracts relating to the underlier.
Calculation Agent
Wells Fargo Securities, LLC, one of our
affiliates and a wholly owned subsidiary of Wells Fargo & Company, will act as initial calculation agent for the securities
and may appoint agents to assist it in the performance of its duties. Pursuant to the calculation agent agreement, we may appoint
a different calculation agent without your consent and without notifying you.
The calculation agent will determine the
cash settlement amount you receive at stated maturity. In addition, the calculation agent will, among other things:
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determine whether a market disruption event or non-trading day has occurred;
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determine if adjustments are required to the fund closing price of the underlier under various
circumstances; and
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if the underlier undergoes a liquidation event, select a successor underlier (as defined below)
or, if no successor underlier is available, determine the fund closing price.
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All determinations made by the calculation
agent will be at the sole discretion of the calculation agent and, in the absence of manifest error, will be conclusive for all
purposes and binding on us and you. The calculation agent will have no liability for its determinations.
Market Disruption Events
A “market disruption event”
means any of the following events as determined by the calculation agent in its sole discretion:
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(A)
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The occurrence or existence of a material suspension of or limitation imposed on trading by the
relevant stock exchange or otherwise relating to the shares (or other applicable securities) of the underlier or any successor
underlier on the relevant stock exchange at any time during the one-hour period that ends at the close of trading on such day,
whether by reason of movements in price exceeding limits permitted by such relevant stock exchange or otherwise.
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(B)
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The occurrence or existence of a material suspension of or limitation imposed on trading by any
related futures or options exchange or otherwise in futures or options contracts relating to the shares (or other applicable securities)
of the underlier or any successor underlier on any related futures or options exchange at any time during the one-hour period that
ends at the close of trading on that day, whether by reason of movements in price exceeding limits permitted by the related futures
or options exchange or otherwise.
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(C)
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The occurrence or existence of any event, other than an early closure, that materially disrupts
or impairs the ability of market participants in general to effect transactions in, or obtain market values for, shares (or other
applicable securities) of the underlier or any successor underlier on the relevant stock exchange at any time during the one-hour
period that ends at the close of trading on that day.
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(D)
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The occurrence or existence of any event, other than an early closure, that materially disrupts
or impairs the ability of market participants in general to effect transactions in, or obtain market values for, futures or options
contracts relating to shares (or other applicable securities) of the underlier or any successor underlier on any related futures
or options exchange at any time during the one-hour period that ends at the close of trading on that day.
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(E)
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The closure of the relevant stock exchange or any related futures or options exchange with respect
to the underlier or any successor underlier prior to its scheduled closing time unless the earlier closing time is
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announced by
the relevant stock exchange or related futures or options exchange, as applicable, at least one hour prior to the earlier of (1)
the actual closing time for the regular trading session on such relevant stock exchange or related futures or options exchange,
as applicable, and (2) the submission deadline for orders to be entered into the relevant stock exchange or related futures or
options exchange, as applicable, system for execution at the close of trading on that day.
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(F)
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The relevant stock exchange or any related futures or options exchange with respect to the underlier
or any successor underlier fails to open for trading during its regular trading session.
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For purposes of determining whether a
market disruption event has occurred:
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(1)
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“close of trading” means the scheduled closing time of the relevant stock exchange
with respect to the underlier or any successor underlier; and
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(2)
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the “scheduled closing time” of the relevant stock exchange or any related futures
or options exchange on any trading day for the underlier or any successor underlier means the scheduled weekday closing time of
such relevant stock exchange or related futures or options exchange on such trading day, without regard to after hours or any other
trading outside the regular trading session hours.
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If a market disruption event occurs or
is continuing on the determination date, the determination date will be postponed to the first succeeding trading day on which
a market disruption event has not occurred and is not continuing; however, if such first succeeding trading day has not occurred
as of the eighth trading day after the originally scheduled determination date, that eighth trading day shall be deemed to be the
determination date. If the determination date has been postponed eight trading days after the originally scheduled determination
date and a market disruption event occurs or is continuing with respect to the underlier on such eighth trading day, the calculation
agent will determine the closing price of the underlier on such eighth trading day based on its good faith estimate of the value
of the shares (or other applicable securities) of the underlier as of the close of trading on such eighth trading day.
Anti-dilution Adjustments Relating
to the Underlier; Alternate Calculation
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Anti-dilution Adjustments
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The calculation agent will adjust the adjustment
factor as specified below if any of the events specified below occurs with respect to the underlier and the effective date or ex-dividend
date, as applicable, for such event is after the trade date and on or prior to the determination date.
The adjustments specified below do not
cover all events that could affect the underlier, and there may be other events that could affect the underlier for which the calculation
agent will not make any such adjustments, including, without limitation, an ordinary cash dividend. Nevertheless, the calculation
agent may, in its sole discretion, make additional adjustments to any terms of the securities upon the occurrence of other events
that affect or could potentially affect the market price of, or shareholder rights in, the underlier, with a view to offsetting,
to the extent practical, any such change, and preserving the relative investment risks of the securities. In addition, the calculation
agent may, in its sole discretion, make adjustments or a series of adjustments that differ from those described herein if the calculation
agent determines that such adjustments do not properly reflect the economic consequences of the events specified in this pricing
supplement or would not preserve the relative investment risks of the securities. All determinations made by the calculation agent
in making any adjustments to the terms of the securities, including adjustments that are in addition to, or that differ from, those
described in this pricing supplement, will be made in good faith and a commercially reasonable manner, with the aim of ensuring
an equitable result. In determining whether to make any adjustment to the terms of the securities, the calculation agent may consider
any adjustment made by the Options Clearing Corporation or any other equity derivatives clearing organization on options contracts
on the underlier.
For any event described below, the calculation
agent will not be required to adjust the adjustment factor unless the adjustment would result in a change to the adjustment factor
then in effect of at least 0.10%. The adjustment factor resulting from any adjustment will be rounded up or down, as appropriate,
to the nearest one-hundred thousandth.
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(A)
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Stock Splits and Reverse Stock Splits
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If a stock split or reverse stock split has occurred, then once such split has become effective, the adjustment factor will be adjusted to equal the product of the prior adjustment factor and the number of securities which a holder of one share (or other applicable security) of the underlier before the effective date of such stock split or reverse stock split would have owned or been entitled to receive immediately following the applicable effective date.
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If a dividend or distribution of shares (or other applicable securities) to which the securities are linked has been made by the underlier ratably to all holders of record of such shares (or other applicable security), then the adjustment factor will be adjusted on the ex-dividend date to equal the prior adjustment factor plus the product of the prior adjustment
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factor and the number of shares (or other applicable security) of the underlier which a holder of one share (or other applicable security) of the underlier before the ex-dividend date would have owned or been entitled to receive immediately following that date; provided, however, that no adjustment will be made for a distribution for which the number of securities of the underlier paid or distributed is based on a fixed cash equivalent value.
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(C)
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Extraordinary Dividends
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If an extraordinary dividend (as defined
below) has occurred, then the adjustment factor will be adjusted on the ex-dividend date to equal the product of the prior
adjustment factor and a fraction, the numerator of which is the closing price per share (or other applicable security) of the underlier
on the trading day preceding the ex-dividend date, and the denominator of which is the amount by which the closing price per share
(or other applicable security) of the underlier on the trading day preceding the ex-dividend date exceeds the extraordinary dividend
amount (as defined below).
For purposes of determining whether an
extraordinary dividend has occurred:
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(1)
“extraordinary dividend” means any cash dividend or distribution (or portion thereof) that the calculation
agent determines, in its sole discretion, is extraordinary or special; and
(2)
“extraordinary dividend amount” with respect to an extraordinary dividend for the securities of the underlier
will equal the amount per share (or other applicable security) of the underlier of the applicable cash dividend or distribution
that is attributable to the extraordinary dividend, as determined by the calculation agent in its sole discretion.
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A distribution on the securities of the underlier described below under the section entitled “—Reorganization Events” below that also constitutes an extraordinary dividend will only cause an adjustment pursuant to that “—Reorganization Events” section.
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If the underlier declares or makes a distribution to all holders of the shares (or other applicable security) of the underlier of any non-cash assets, excluding dividends or distributions described under the section entitled “—Stock Dividends” above, then the calculation agent may, in its sole discretion, make such adjustment (if any) to the adjustment factor as it deems appropriate in the circumstances. If the calculation agent determines to make an adjustment pursuant to this paragraph, it will do so with a view to offsetting, to the extent practical, any change in the economic position of a holder of the securities that results solely from the applicable event.
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(E)
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Reorganization Events
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If the underlier, or any successor underlier, is subject to a merger, combination, consolidation or statutory exchange of securities with another exchange traded fund, and the underlier is not the surviving entity (a “reorganization event”), then, on or after the date of such event, the calculation agent shall, in its sole discretion, make an adjustment to the adjustment factor or the method of determining the cash settlement amount or any other terms of the securities as the calculation agent determines appropriate to account for the economic effect on the securities of such event, and determine the effective date of that adjustment. If the calculation agent determines that no adjustment that it could make will produce a commercially reasonable result, then the calculation agent may deem such event a liquidation event (as defined below).
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If the underlier is de-listed, liquidated
or otherwise terminated (a “liquidation event”), and a successor or substitute exchange traded fund exists that
the calculation agent determines, in its sole discretion, to be comparable to the underlier, then, upon the calculation agent’s
notification of that determination to the trustee and Wells Fargo, any subsequent fund closing price for the underlier will be
determined by reference to the fund closing price of such successor or substitute exchange traded fund (such exchange traded fund
being referred to herein as a “successor underlier”), with such adjustments as the calculation agent determines
are appropriate to account for the economic effect of such substitution on holders of the securities.
If the underlier undergoes a liquidation
event prior to, and such liquidation event is continuing on, the date that any fund closing price of the underlier is to be determined
and the calculation agent determines that no successor underlier is available at such time, then the calculation agent will, in
its discretion, calculate the fund closing price for the underlier on such date by a computation methodology that the calculation
agent determines will as closely as reasonably possible replicate the underlier, provided that if the calculation agent determines
in its discretion that it is not practicable to replicate the underlier (including but not limited to the instance in which the
underlying index sponsor discontinues publication of the underlying index), then the calculation agent will calculate the fund
closing price for the underlier in accordance with the formula last used to calculate such fund closing price before such liquidation
event, but using only those securities that
were held by the underlier immediately prior to such liquidation event without any
rebalancing or substitution of such securities following such liquidation event.
If a successor underlier is selected or
the calculation agent calculates the fund closing price as a substitute for the underlier, such successor underlier or fund closing
price will be used as a substitute for the underlier for all purposes, including for purposes of determining whether a market disruption
event exists. Notwithstanding these alternative arrangements, a liquidation event with respect to the underlier may adversely affect
the value of the securities.
If any event is both a reorganization
event and a liquidation event, such event will be treated as a reorganization event for purposes of the securities unless the calculation
agent makes the determination referenced in the last sentence of the section entitled “—Anti-dilution Adjustments—Reorganization
Events” above.
If at any time the method of calculating
the underlier or a successor underlier, or the underlying index, is changed in a material respect, or if the underlier or a successor
underlier is in any other way modified so that the underlier does not, in the opinion of the calculation agent, fairly represent
the price of the securities of the underlier or such successor underlier had such changes or modifications not been made, then
the calculation agent may, at the close of business in New York City on the date that any fund closing price is to be determined,
make such calculations and adjustments as, in the good faith judgment of the calculation agent, may be necessary in order to arrive
at a closing price of the underlier comparable to the underlier or such successor underlier, as the case may be, as if such changes
or modifications had not been made, and calculate the fund closing price and the cash settlement amount with reference to such
adjusted closing price of the underlier or such successor underlier, as applicable.
Events of Default and Acceleration
If an event of default with respect to
the securities has occurred and is continuing, the amount payable to a holder of a security upon any acceleration permitted by
the securities, with respect to each security, will be equal to the cash settlement amount, calculated as provided herein. The
cash settlement amount will be calculated as though the date of acceleration were the determination date.
iShares® MSCI Emerging
Markets ETF
The iShares®
MSCI Emerging Markets ETF seeks investment results that correspond generally to the price and yield performance, before fees and
expenses, of the MSCI Emerging Markets Index, an equity index that is designed to measure equity market performance in the global
emerging markets. See “Description of Exchange Traded Funds—The iShares®
MSCI Emerging Markets ETF” in the accompanying market measure supplement for additional information about the iShares®
MSCI Emerging Markets ETF.
In addition, information about the iShares®
Emerging Markets ETF may be obtained from other sources, including, but not limited to, the underlier sponsor’s website (including
information regarding (a) the underlier’s (i) top ten constituents and their weightings, (ii) sector weightings and (iii)
country weightings; (b) returns of the underlier and underlying index for certain periods; and (c) the fees paid to the underlier
sponsor). We are not incorporating by reference into this pricing supplement the website or any material it includes. Neither we
nor the agent makes any representation that such publicly available information regarding the iShares®
Emerging Markets ETF is accurate or complete.
Historical Information
We obtained the closing prices of the
iShares® MSCI Emerging Markets ETF from Bloomberg Financial Markets without
independent verification.
The historical performance of the underlier
should not be taken as an indication of the future performance of the underlier during the term of the securities.
The following graph sets forth the daily
closing prices of the underlier for each day in the period from January 1, 2014 through November 5, 2019. The closing price on
November 5, 2019 was $43.90.
iShares® MSCI
Emerging Markets ETF Daily Closing Prices
iShares® is a registered mark
of BlackRock Institutional Trust Company, N.A. (“BTC”). The securities are not sponsored, endorsed, sold or
promoted by BTC, its affiliate, BlackRock Fund Advisors (“BFA”) or iShares, Inc. None of BTC, BFA or iShares,
Inc. makes any representations or warranties to the holders of the securities or any member of the public regarding the advisability
of investing in the securities. None of BTC, BFA or iShares, Inc. will have any obligation or liability in connection with the
registration, operation, marketing, trading or sale of the securities or in connection with Wells Fargo Finance LLC’s or
Wells Fargo & Company’s use of information about the iShares® MSCI Emerging Markets ETF.
Benefit Plan Investor Considerations
Each fiduciary of a pension, profit-sharing
or other employee benefit plan to which Title I of the Employee Retirement Income Security Act of 1974 (“ERISA”)
applies (a “plan”), should consider the fiduciary standards of ERISA in the context of the plan’s particular
circumstances before authorizing an investment in the securities. Accordingly, among other factors, the fiduciary should consider
whether the investment would satisfy the prudence and diversification requirements of ERISA and would be consistent with the documents
and instruments governing the plan. When we use the term “holder” in this section, we are referring to a beneficial
owner of the securities and not the record holder.
Section 406 of ERISA and Section 4975
of the Code prohibit plans, as well as individual retirement accounts and Keogh plans to which Section 4975 of the Code applies
(also “plans”), from engaging in specified transactions involving “plan assets” with persons who
are “parties in interest” under ERISA or “disqualified persons” under the Code (collectively, “parties
in interest”) with respect to such plan. A violation of those “prohibited transaction” rules may result in
an excise tax or other liabilities under ERISA and/or Section 4975 of the Code for such persons, unless statutory or administrative
exemptive relief is available. Therefore, a fiduciary of a plan should also consider whether an investment in the securities might
constitute or give rise to a prohibited transaction under ERISA and the Code.
Employee benefit plans that are governmental
plans, as defined in Section 3(32) of ERISA, certain church plans, as defined in Section 3(33) of ERISA, and foreign plans, as
described in Section 4(b)(4) of ERISA (collectively, “Non-ERISA Arrangements”), are not subject to the requirements
of ERISA, or Section 4975 of the Code, but may be subject to similar rules under other applicable laws or regulations (“Similar
Laws”).
We and our affiliates may each be considered
a party in interest with respect to many plans. Special caution should be exercised, therefore, before the securities are purchased
by a plan. In particular, the fiduciary of the plan should consider whether statutory or administrative exemptive relief is available.
The U.S. Department of Labor has issued five prohibited transaction class exemptions (“PTCEs”) that may provide
exemptive relief for direct or indirect prohibited transactions resulting from the purchase or holding of the securities. Those
class exemptions are:
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PTCE 96-23, for specified transactions determined by in-house asset managers;
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PTCE 95-60, for specified transactions involving insurance company general accounts;
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PTCE 91-38, for specified transactions involving bank collective investment funds;
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PTCE 90-1, for specified transactions involving insurance company separate accounts; and
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PTCE 84-14, for specified transactions determined by independent qualified professional asset managers.
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In addition, Section 408(b)(17) of ERISA
and Section 4975(d)(20) of the Code provide an exemption for transactions between a plan and a person who is a party in interest
(other than a fiduciary who has or exercises any discretionary authority or control with respect to investment of the plan assets
involved in the transaction or renders investment advice with respect thereto) solely by reason of providing services to the plan
(or by reason of a relationship to such a service provider), if in connection with the transaction of the plan receives no less,
and pays no more, than “adequate consideration” (within the meaning of Section 408(b)(17) of ERISA).
Any purchaser or holder of the securities
or any interest in the securities will be deemed to have represented by its purchase and holding that either:
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no portion of the assets used by such purchaser or holder to acquire or purchase the securities
constitutes assets of any plan or Non-ERISA Arrangement; or
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the purchase and holding of the securities by such purchaser or holder will not constitute a non-exempt
prohibited transaction under Section 406 of ERISA or Section 4975 of the Code or similar violation under any Similar Laws.
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Due to the complexity of these rules and
the penalties that may be imposed upon persons involved in non-exempt prohibited transactions, it is particularly important that
fiduciaries or other persons considering purchasing the securities on behalf of or with “plan assets” of any plan consult
with their counsel regarding the potential consequences under ERISA and the Code of the acquisition of the securities and the availability
of exemptive relief.
The securities are contractual financial
instruments. The financial exposure provided by the securities is not a substitute or proxy for, and is not intended as a substitute
or proxy for, individualized investment management or advice for the benefit of any purchaser or holder of the securities. The
securities have not been designed and will not be administered in a manner intended to reflect the individualized needs and objectives
of any purchaser or holder of the securities.
Each purchaser or holder of the securities
acknowledges and agrees that:
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(i)
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the purchaser or holder or its fiduciary has made and shall make all investment decisions for the
purchaser or holder and the purchaser or holder has not relied and shall not rely in any way upon us or our affiliates to act as
a fiduciary or adviser of the purchaser or holder with respect to (a) the design and terms of the securities, (b) the purchaser
or holder’s investment in the securities, or (c) the exercise of or failure to exercise any rights we have under or with
respect to the securities;
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(ii)
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we and our affiliates have acted and will act solely for our own account in connection with (a)
all transactions relating to the securities and (b) all hedging transactions in connection with our obligations under the securities;
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(iii)
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any and all assets and positions relating to hedging transactions by us or our affiliates are assets
and positions of those entities and are not assets and positions held for the benefit of the purchaser or holder;
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(iv)
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our interests may be adverse to the interests of the purchaser or holder; and
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(v)
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neither we nor any of our affiliates is a fiduciary or adviser of the purchaser or holder in connection
with any such assets, positions or transactions, and any information that we or any of our affiliates may provide is not intended
to be impartial investment advice.
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Purchasers of the securities have the
exclusive responsibility for ensuring that their purchase, holding and subsequent disposition of the securities does not violate
the fiduciary or prohibited transaction rules of ERISA, the Code or any Similar Law. Nothing herein shall be construed as a representation
that an investment in the securities would be appropriate for, or would meet any or all of the relevant legal requirements with
respect to investments by, plans or Non-ERISA Arrangements generally or any particular plan or Non-ERISA Arrangement.
United States Federal Tax Considerations
The following is a discussion of the material
U.S. federal income and certain estate tax consequences of the ownership and disposition of the securities. It applies to you only
if you purchase a security for cash in the initial offering at the “issue price,” which is the first price at which
a substantial amount of the securities is sold to the public, and hold the security as a capital asset within the meaning of Section
1221 of the Code. It does not address all of the tax consequences that may be relevant to you in light of your particular circumstances
or if you are an investor subject to special rules, such as:
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a financial institution;
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a “regulated investment company”;
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a tax-exempt entity, including an “individual retirement account” or “Roth IRA”;
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a dealer or trader subject to a mark-to-market method of tax accounting with respect to the securities;
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a person holding a security as part of a “straddle” or conversion transaction or who
has entered into a “constructive sale” with respect to a security;
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a U.S. holder (as defined below) whose functional currency is not the U.S. dollar; or
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an entity classified as a partnership for U.S. federal income tax purposes.
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If an entity that is classified as a partnership
for U.S. federal income tax purposes holds the securities, the U.S. federal income tax treatment of a partner will generally depend
on the status of the partner and the activities of the partnership. If you are a partnership holding the securities or a partner
in such a partnership, you should consult your tax adviser as to your particular U.S. federal tax consequences of holding and disposing
of the securities.
This discussion is based on the Code,
administrative pronouncements, judicial decisions and final, temporary and proposed Treasury regulations, all as of the date of
this pricing supplement, changes to any of which subsequent to the date of this pricing supplement may affect the tax consequences
described herein, possibly with retroactive effect. This discussion does not address the effects of any applicable state, local
or non-U.S. tax laws, any alternative minimum tax consequences, the potential application of the Medicare tax on investment income
or the consequences to taxpayers subject to special tax accounting rules under Section 451(b) of the Code. You should consult your
tax adviser concerning the application of U.S. federal income and estate tax laws to your particular situation (including the possibility
of alternative treatments of the securities), as well as any tax consequences arising under the laws of any state, local or non-U.S.
jurisdiction.
Tax Treatment of the Securities
In the opinion of our counsel, Davis Polk & Wardwell LLP, a security should be treated as a prepaid derivative contract that is an “open transaction” for
U.S. federal income tax purposes. By purchasing a security, you agree (in the absence of an administrative determination or judicial
ruling to the contrary) to this treatment.
Due to the absence of statutory, judicial
or administrative authorities that directly address the U.S. federal tax treatment of the securities or similar instruments, significant
aspects of the treatment of an investment in the securities are uncertain. We do not plan to request a ruling from the IRS, and
the IRS or a court might not agree with the treatment described below. Moreover, our counsel’s opinion is based on market
conditions as of the date of this preliminary pricing supplement and is subject to confirmation in the final pricing supplement.
Accordingly, you should consult your tax adviser regarding all aspects of the U.S. federal income and estate tax consequences of
an investment in the securities. Unless otherwise indicated, the following discussion is based on the treatment of the securities
as prepaid derivative contracts that are “open transactions.”
Tax Consequences to U.S. Holders
This section applies only to U.S. holders.
You are a “U.S. holder” if you are a beneficial owner of a security that is, for U.S. federal income tax purposes:
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a citizen or individual resident of the United States;
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a corporation created or organized in or under the laws of the United States, any state therein
or the District of Columbia; or
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an estate or trust the income of which is subject to U.S. federal income taxation regardless of
its source.
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Tax Treatment Prior to Maturity.
You should not be required to recognize income over the term of the securities prior to maturity, other than pursuant to a sale,
exchange or retirement as described below.
Sale, Exchange or Retirement of the
Securities. Upon a sale, exchange or retirement of the securities, you should recognize gain or loss equal to the difference
between the amount realized on the sale, exchange or retirement and your tax basis in the securities that are sold, exchanged or
retired. Your tax basis in the securities should equal the amount you paid to acquire them. Subject to the discussion below concerning
the potential application of the “constructive ownership” rules under Section 1260 of the Code, this gain or loss should
be long-term capital gain or loss if at the time of the sale, exchange or retirement you held the securities for more than one
year, and short-term capital gain or loss otherwise. Long-term capital gains recognized by non-corporate U.S. holders are generally
subject to taxation at reduced rates. The deductibility of capital losses is subject to certain limitations.
Potential Application of Section 1260
of the Code. There is a risk that your purchase of a security may be treated as entry into a “constructive ownership
transaction,” within the meaning of Section 1260 of the Code, with respect to shares of the underlier. In that case, all
or a portion of any long-term capital gain you would otherwise recognize in respect of your securities would be recharacterized
as ordinary income to the extent such gain exceeded the “net underlying long-term capital gain.” Any long-term capital
gain recharacterized as ordinary income under Section 1260 would be treated as accruing at a constant rate over the period you
held your securities, and you would be subject to an interest charge in respect of the deemed tax liability on the income treated
as accruing in prior tax years. Due to the lack of governing authority under Section 1260, our counsel is not able to opine as
to whether or how Section 1260 applies to the securities, including how the “net underlying long-term capital gain”
should be computed if Section 1260 does apply. You should consult your tax adviser regarding the potential application of the “constructive
ownership” rule.
Possible Alternative Tax Treatments
of an Investment in the Securities
Alternative U.S. federal income tax treatments
of the securities are possible that, if applied, could materially and adversely affect the timing and/or character of income, gain
or loss with respect to them. It is possible, for example, that the securities could be treated as debt instruments governed
by Treasury regulations relating to the taxation of contingent payment debt instruments. In that case, regardless of your
method of tax accounting for U.S. federal income tax purposes, you generally would be required to accrue income based on our comparable
yield for similar non-contingent debt, determined as of the time of issuance of the securities, in each year that you held the
securities, even though we are not required to make any payment with respect to the securities prior to maturity. In addition,
any gain on the sale, exchange or retirement of the securities would be treated as ordinary income.
Other possible U.S. federal income tax
treatments of the securities could also affect the timing and character of income or loss with respect to the securities. In 2007,
the U.S. Treasury Department and the IRS released a notice requesting comments on the U.S. federal income tax treatment of “prepaid
forward contracts” and similar instruments. The notice focuses in particular on whether to require holders of these instruments
to accrue income over the term of their investment. It also asks for comments on a number of related topics, including the character
of income or loss with respect to these instruments; whether short-term instruments should be subject to any such accrual regime;
the relevance of factors such as the exchange-traded status of the instruments and the nature of the underlying property to which
the instruments are linked; and whether these instruments are or should be subject to the “constructive ownership”
regime described above. While the notice requests comments on appropriate transition rules and effective dates, any Treasury regulations
or other guidance promulgated after consideration of these issues could materially and adversely affect the tax consequences of
an investment in the securities, possibly with retroactive effect. You should consult your tax adviser regarding the possible alternative
treatments of an investment in the securities and the issues presented by this notice.
Tax Consequences to Non-U.S. Holders
This section applies only to non-U.S.
holders. You are a “non-U.S. holder” if you are a beneficial owner of a security that is, for U.S. federal income
tax purposes:
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an individual who is classified as a nonresident alien;
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a foreign corporation; or
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a foreign estate or trust.
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You are not a non-U.S. holder for purposes
of this discussion if you are (i) an individual who is present in the United States for 183 days or more in the taxable year of
disposition or (ii) a former citizen or resident of the United States. If you are or may become such a person during the period
in which you hold a security, you should consult your tax adviser regarding the U.S. federal tax consequences of an investment
in the securities.
Sale, Exchange or Retirement of the
Securities. Subject to the discussion below regarding Section 871(m), you generally should not be subject to U.S. federal income
or withholding tax in respect of amounts paid to you, provided that income in respect of the securities is not effectively connected
with your conduct of a trade or business in the United States.
If you are engaged in a U.S. trade or
business, and if income from the securities is effectively connected with the conduct of that trade or business, you generally
will be subject to regular U.S. federal income tax with respect to that income in the same manner as if you were a U.S. holder,
unless an applicable income tax treaty provides otherwise. If you are such a holder and you are a corporation, you should also
consider the potential application of a 30% (or lower treaty rate) branch profits tax.
Tax Consequences Under Possible Alternative
Treatments. If all or any portion of a security were recharacterized as a debt instrument, subject to the discussions below
regarding FATCA and Section 871(m), any payment made to you with respect to the security generally should not be subject to U.S.
federal withholding or income tax, provided that: (i) income or gain in respect of the security is not effectively connected with
your conduct of a trade or business in the United States, and (ii) you provide an appropriate IRS Form W-8 certifying under penalties
of perjury that you are not a United States person.
Other U.S. federal income tax treatments
of the securities are also possible. In 2007, the U.S. Treasury Department and the IRS released a notice requesting comments on
the U.S. federal income tax treatment of “prepaid forward contracts” and similar instruments. Among the issues addressed
in the notice is the degree, if any, to which income with respect to instruments such as the securities should be subject to U.S.
withholding tax. While the notice requests comments on appropriate transition rules and effective dates, it is possible that any
Treasury regulations or other guidance promulgated after consideration of these issues might materially and adversely affect the
withholding tax consequences of an investment in the securities, possibly with retroactive effect. Accordingly, you should consult
your tax adviser regarding the issues presented by the notice.
Possible Withholding Under Section 871(m)
of the Code. Section 871(m) of the Code and Treasury regulations promulgated thereunder (“Section 871(m)”) generally
impose a 30% withholding tax on dividend equivalents paid or deemed paid to non-U.S. holders with respect to certain financial
instruments linked to U.S. equities (“U.S. underlying equities”) or indices that include U.S. underlying equities.
Section 871(m) generally applies to instruments that substantially replicate the economic performance of one or more U.S. underlying
equities, as determined based on tests set forth in the applicable Treasury regulations (a “specified security”).
However, the regulations, as modified by an IRS notice, exempt financial instruments issued prior to January 1, 2021 that do not
have a “delta” of one. Based on the terms of the securities and representations provided by us, our counsel is of the
opinion that the securities should not be treated as transactions that have a “delta” of one within the meaning of
the regulations with respect to any U.S. underlying equity and, therefore, should not be specified securities subject to withholding
tax under Section 871(m).
A determination that the securities are
not subject to Section 871(m) is not binding on the IRS, and the IRS may disagree with this treatment. Moreover, Section 871(m)
is complex and its application may depend on your particular circumstances. For example, if you enter into other transactions relating
to a U.S. underlying equity, you could be subject to withholding tax or income tax liability under Section 871(m) even if the securities
are not specified securities subject to Section 871(m) as a general matter. You should consult your tax adviser regarding the potential
application of Section 871(m) to the securities.
This information is indicative and will
be updated in the final pricing supplement or may otherwise be updated by us in writing from time to time. Non-U.S. holders should
be warned that Section 871(m) may apply to the securities based on circumstances as of the pricing date for the securities and,
therefore, it is possible that the securities will be subject to withholding tax under Section 871(m).
If withholding tax applies to the securities,
we will not be required to pay any additional amounts with respect to amounts so withheld.
U.S. Federal Estate Tax
If you are an individual non-U.S. holder
or an entity the property of which is potentially includible in such an individual’s gross estate for U.S. federal estate
tax purposes (for example, a trust funded by such an individual and with respect to which the individual has retained certain interests
or powers), you should note that, absent an applicable treaty exemption, the securities may be treated as U.S. situs property subject
to U.S. federal estate tax. If you are such an individual or entity, you should consult your tax adviser regarding the U.S. federal
estate tax consequences of investing in the securities.
Information Reporting and Backup Withholding
Amounts paid on the securities, and the
proceeds of a sale, exchange or other disposition of the securities, may be subject to information reporting and, if you fail
to provide certain identifying information (such as an accurate taxpayer identification
number if you are a U.S. holder) or meet certain
other conditions, may also be subject to backup withholding at the rate specified in the Code. If you are a non-U.S. holder that
provides an appropriate IRS Form W-8, you will generally establish an exemption from backup withholding. Amounts withheld under
the backup withholding rules are not additional taxes and may be refunded or credited against your U.S. federal income tax liability,
provided the relevant information is timely furnished to the IRS.
FATCA
Legislation commonly referred to as “FATCA”
generally imposes a withholding tax of 30% on payments to certain non-U.S. entities (including financial intermediaries) with respect
to certain financial instruments, unless various U.S. information reporting and due diligence requirements have been satisfied.
An intergovernmental agreement between the United States and the non-U.S. entity’s jurisdiction may modify these requirements.
This legislation applies to certain financial instruments that are treated as paying U.S.-source interest, dividends or dividend
equivalents or other U.S.-source “fixed or determinable annual or periodical” income (“FDAP income”).
If required under FATCA, withholding applies to payments of FDAP income. While existing Treasury regulations would also require
withholding on payments of gross proceeds of the disposition (including upon retirement) of certain financial instruments treated
as paying U.S.-source interest or dividends, the U.S. Treasury Department has indicated in subsequent proposed regulations its
intent to eliminate this requirement. The U.S. Treasury Department has indicated that taxpayers may rely on these proposed regulations
pending their finalization. If the securities were treated as debt instruments or as subject to Section 871(m), the withholding
regime under FATCA would apply to the securities. If withholding applies to the securities, we will not be required to pay any
additional amounts with respect to amounts withheld. If you are a non-U.S. holder, or a U.S. holder holding securities through
a non-U.S. intermediary, you should consult your tax adviser regarding the potential application of FATCA to the securities.
The preceding discussion constitutes the full opinion of Davis
Polk & Wardwell LLP regarding the material U.S. federal tax consequences of owning and disposing of the securities.
You should consult your tax adviser
regarding all aspects of the U.S. federal income and estate tax consequences of an investment in the securities and any tax consequences
arising under the laws of any state, local or non-U.S. taxing jurisdiction.
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