Wells Fargo & Co. agreed to pay $1 billion to settle a shareholder lawsuit that accused it of making false statements about its compliance with federal consent decrees following a 2016 scandal involving the opening of unauthorized customer accounts.
The settlement is one of the top six largest securities class-action settlements of the past decade, according to lawyers for the investors, who filed a request Monday for a Manhattan judge to according to the agreement.
Investors sued the bank in 2020 claiming that its former chief executive officer, Tim Sloan, and other executives made misleading statements in testimony before Congress and to investors and the media.
Investors accused the executives of presenting a bright scenario about their interactions with regulators, including not disclosing that their initial reform plans had been rejected by the authorities.
The proceeds of the settlement will go to investors who bought Wells Fargo stock from February 2, 2018, to March 12, 2020.
Wells Fargo representatives did not immediately respond after regular business hours to a request for comment on the settlement, which was previously reported by the Wall Street Journal.
The agreement follows a previous settlement four years ago over the fake bank account scandal among executives and directors worth $320 million and a 2018 shareholder accord that cost the company $480 million. In 2020, Wells Fargo agreed to pay $3 billion to settle US investigations into more than a decade of widespread consumer abuse under a deal that allowed the bank to avoid criminal charges .
While sales abuses have been repeatedly described in previous reviews, the 2020 settlement provides more details on the high-pressure environment that led legions of low-level employees to violate the law – often costs them their jobs when they are caught by the internal company. controls. Many inside the bank referred to the abusive marketing practices as “gaming,” according to prosecutors at the time.
Photo: Photographer: David Paul Morris/Bloomberg
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