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JPMorgan downgrades Wells Fargo on reputational risk

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JPMorgan lowered its rating for Wells Fargo to neutral from overweight, citing the risks of more litigation costs and higher regulation after the Senate hearings with bank CEO John Stumpf.

"We are downgrading Wells Fargo ... following tough Senate hearings and mounting public scrutiny following the opening of fraudulent accounts," analyst Vivek Juneja wrote in a note to clients Wednesday.

"We expect these will result in additional investigations which would likely pressure expenses and revenues and continued media scrutiny with an election year — there is significant uncertainty about how much some issues will cost and how long they will take."