Wells Fargo Settles Securities Class Actions Over Fake Accounts for $480M
It's the largest payment the bank has agreed to make so far since the scandal broke in 2016. But Wells Fargo is not out of the woods yet.
May 04, 2018 at 06:36 PM
2 minute read
Wells Fargo branch in San Francisco. Credit: Mike Scarcella/ ALM
SAN FRANCISCO — Wells Fargo & Co. has settled a set of federal securities fraud class actions over the bank's fake accounts scandal for $480 million, the company said on Friday.
The company's defense counsel, led by Sullivan & Cromwell, said in a court filing that it has “reached an agreement in principle” to settle the shareholder suits. The bank disclosed that it had agreed to pay $480 million in a separate filing to the Securities and Exchange Commission.
The settlement will still be subject to final approval by the court, it noted. The federal securities class action litigation against Wells Fargo has been consolidated in front of U.S. District Judge Jon Tigar of the Northern District of California.
“We are pleased to reach this agreement in principle and believe that moving to put this case behind us is in the best interest of our team members, customers, investors and other stakeholders,” CEO Tim Sloan said in a statement. “We are making strong progress in our work to rebuild trust, and this represents another step forward.”
The firms leading the case for the shareholder plaintiffs are Bernstein Litowitz Berger & Grossmann, Klausner, Kaufman, Jensen & Levinson, and Robbins Geller Rudman & Dowd.
The settlement is the latest in a line of payments that Wells Fargo has agreed to make since the San Francisco-headquartered banking giant acknowledged in 2016 that bank workers had opened fake accounts for consumers in order to meet aggressive sales targets.
The bank agreed to pay $142 million to affected consumers in a settlement currently pending in front of U.S. District Judge Vince Chhabria of the Northern District of California. A final approval hearing for that settlement is set for May 30.
In 2016, the bank also agreed to pay $190 million to various government entities for the misconduct.
But Wells Fargo is not out of the woods yet. The company noted in its SEC filing that there are still pending derivative shareholder suits in state and federal courts in California, as well as in Delaware, and various related litigation on behalf of bank employees around the country.
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