HomeBusinessWells Fargo to pay $1 billion to settle shareholder lawsuit

Wells Fargo to pay $1 billion to settle shareholder lawsuit

Wells Fargo has agreed to pay $1 billion to settle a class action lawsuit accusing the bank of exaggerating how much progress it had made to correct illegal practices that regulators say have harmed millions of customers.

The settlement, detailed in court documents Monday, is the latest in a succession of settlements and fines the bank has paid in the wake of a massive fraud that came to light nearly a decade ago. From 2002 to 2016, bank employees, facing unrealistic sales targets imposed by their bosses, opened millions of accounts in clients’ names without their knowledge.

Wells Fargo fired top executives and engaged with regulators that would fix the internal deficiencies that caused the scandal and other practices that put customers at risk.

The latest settlement resolves a lawsuit filed on behalf of shareholders that focused on the bank’s conduct between 2018 and 2020, after regulators identified many of the problems. The plaintiffs, including pension funds from Mississippi, Rhode Island and Louisiana, said Wells Fargo defrauded investors by giving the false impression that it was further along in addressing the regulators’ orders than it had disclosed in that moment. The agreement, which must be approved by a federal judge in New York, was previously reported by The Wall Street Journal.

Wells Fargo, who could not immediately be reached for comment, has said it is working to address the issues that have led to the lawsuits and regulatory sanctions.

Controversies have engulfed Wells Fargo for years, including fake accounts, improper mortgage changes and accidental releases of customer data.

In December, the bank agreed to pay $3.7 billion to resolve claims by the Consumer Financial Protection Bureau that he participated in a series of banking violations. Wells Fargo agreed to pay $3 billion in 2020 to resolve consumer abuse investigations that spanned more than a decade.

Twice in the past seven years, the bank’s chief executive has been ousted: John G. Stumpf in 2016, and timothy sloan in 2019. A senior executive, Carrie L. TolstedtHe pleaded guilty in March to a criminal charge related to the fake accounts scandal and faces up to 16 months in prison.

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