Wells Fargo & Co. (WFC) - Get Report dropped in New York trading Monday after legendary investor Warren Buffett criticized the bank and its former CEO for reacting too slowly to last year's bogus-accounts scandal.

Buffett, whose Berkshire Hathaway Inc. (BRK.A) - Get Reportis Wells Fargo's biggest shareholder with a 10% holding worth about $27 billion, said management had encouraged the "wrong type of behavior," which ultimately led to employees opening fake accounts in order to earn performance bonuses.

"The main problem was they didn't act when they learned about it," Buffett told reporters at his annual shareholder meeting over the weekend in Omaha. "They were totally wrong on that."

The scandal claimed former CEO John Stumpf, who abruptly retired last year, and led to what the bank has described as "decisive actions" to "make things right for our customers."

Wells Fargo fell 0.4% to $54.90 in midday trading; the stock has slipped 0.37% this year, trailing a gain of 7.2% on the broader S&P 500.

A technical expert for TheStreet's premium investing site Real Money, Bruce Kamich, cautioned last week that the stock isn't showing good relative strength versus the Financial Select Sector SPDR (XLF) - Get Report benchmark and that it might not be time to ride the stock just yet.

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