Wells Fargo’s stock slump has cost Warren Buffett’s Berkshire Hathaway $2.4 billion (WFC)

Shares of Wells Fargo more than 7% when markets opened Monday, costing Warren Buffett’s Berkshire Hathaway company more than $2.4 billion, following a cease and desist letter from the Federal Reserve.

The US’ top bank regulator on Friday announced new sanctions against Wells Fargo, the country’s third-largest bank by assets, limiting its balance sheet to $1.95 trillion and ordering it to beef up its oversight and governance following a sales scandal that has bogged down the bank since 2016

Berkshire Hathaway owned roughly 488.5 million shares of Wells Fargo, or 9.92%, as of September 30, 2017, according to regulatory filings. The billionaireinitially dumped 9 million shares in April 2017, worth $480 million at the time, to stay below the Fed’s 10% ownership limit and avoid regulations.

“We cannot tolerate pervasive and persistent misconduct at any bank and the consumers harmed by Wells Fargo expect that robust and comprehensive reforms will be put in place to make certain that the abuses do not occur again," Federal Reserve Chair Janet Yellen said in a press release on her last day at the central bank.

"The enforcement action we are taking today will ensure that Wells Fargo will not expand until it is able to do so safely and with the protections needed to manage all of its risks and protect its customers."

When the fake accounts scandal first came to light, Buffett originally called the scandal a “huge mistake,” but said he didn’t plan to sell any more shares once the bank paid its $185 million fine.

“John Stumpf is a perfectly decent guy in my opinion," Buffett said of the former CEO who stepped down following the scandal’s revelation. “I'd have him as a trustee in my will and I wouldn't worry for a second. But somehow, when he saw the evidence, he didn't do something about it."

In a press release Friday, Wells Fargo CEO Timothy Sloan re-affirmed the bank's response to the Fed’s latest move.

"We take this order seriously and are focused on addressing all of the Federal Reserve’s concerns,” he said. “It is important to note that the consent order is not related to any new matters, but to prior issues where we have already made significant progress. We appreciate the Federal Reserve’s acknowledgment of our actions to date. In addition, the order is not related to Wells Fargo’s financial condition -- we remain in a strong financial position and stand ready to serve the varied financial needs of our customers."

The bank has 60 days to provide the Fed with plans detailing what the company has done so far to beef up its compliance operations, and what it plans to improve going forward.

Berkshire Hathaway did not immediately respond to a request for comment from Business Insider.

Shares of Wells Fargo were trading down 7.36% Monday morning at the time of writing, and up 5.25% in the last 12 months. Berkshire Hathaway A and B shares were both down just over 1%.