May 15, 2023
For Immediate Release
Press Contact: Tess Roy tess.roy@berlinrosen.com
Investors Successfully Negotiate Settlement in Case Against Wells Fargo Alleging the Bank Misled Investors About Its Compliance with Federal Consent Orders and Likelihood Its Asset Cap Would be Lifted and Look Forward to the Court’s Consideration of the Settlement
NEW YORK, NY – Today, Co-Lead Plaintiffs and Co-Lead Counsel Cohen Milstein Sellers & Toll PLLC announced that they have reached a $1 billion settlement with Wells Fargo (NYSE: WFC) in a securities fraud class action lawsuit, which is subject to court approval to be sought in the coming weeks. If approved by the court, the $1 billion settlement will be among the top twenty securities class action settlements of all time. The case alleges that between May 30, 2018 and March 12, 2020, the Bank and its top executives made false and misleading statements to the public and Congress regarding issues of critical concern to its investors: its compliance with consent orders imposed by the federal government after the Bank’s 2016 consumer scandal involving the opening of unauthorized customer accounts, as well as when regulators would lift the asset cap they had imposed on the Bank that limited the Bank’s growth.
“We are proud to represent two state retirement systems in their effort to hold Wells Fargo accountable for its misconduct,” said Steven J. Toll, Managing Partner at Cohen Milstein Sellers & Toll. “If approved, this settlement will help compensate hundreds of thousands of investors – state employees, nurses, teachers, police, firefighters and others – whose critical retirement savings were impacted by Wells Fargo’s fraudulent business practices.”
“We are pleased to be one step closer towards securing a favorable result for investors in their claims against Wells Fargo, and are honored to bring this landmark settlement before the Court for approval,” said Laura H. Posner, Partner at Cohen Milstein Sellers & Toll.
In 2018, Wells Fargo entered into consent orders with the Federal Reserve Board, Office of the Comptroller of the Currency, and Consumer Financial Protection Bureau, to rectify governance and oversight failures that had allowed systemic fraudulent practices to occur at the Bank, including opening millions of unauthorized bank accounts and charging hundreds of thousands of borrowers for unnecessary insurance. Additionally, the Federal Reserve Board issued an unprecedented asset cap prohibiting Wells Fargo from expanding its assets until it had fully complied with its consent order.
Following entry into the consent orders, plaintiffs allege that Wells Fargo’s senior executives repeatedly told investors that regulators were satisfied with the Bank’s progress under the consent orders and that the asset cap would be timely removed. In fact, the federal regulators repeatedly rejected the Bank’s plans. As a result of the Bank’s alleged false and misleading statements and omissions, shares of Wells Fargo common stock traded at artificially inflated prices, causing investors to pay more for the stock than it was worth.
The truth was ultimately fully revealed in March of 2020, following a confidential year-long investigation by the House Financial Services Committee (“HFSC”). Both the Democratic majority and Republican minority of the HFSC released lengthy reports and held hearings which concluded that Wells Fargo was not in compliance with the consent orders and had not taken the steps necessary to satisfy its obligations. As the market learned of Wells Fargo’s fraud, the stock price plummeted, harming shareholders.
“Wells Fargo betrayed the trust of Rhode Island pensioners and now is rightly facing consequences because of that. I am proud that ERSRI stood up for its stakeholders and held Wells Fargo accountable for its misconduct, and for achieving the historic settlement,” said Rhode Island General Treasurer James A. Diossa on behalf of Co-Lead Plaintiff Employees’ Retirement System of Rhode Island.
Court-appointed lead plaintiffs in this case include Employees’ Retirement System of Rhode Island (ERSRI), the Public Employees’ Retirement System of Mississippi, and Handelsbanken Fonder AB. Court-appointed Lead Counsel are Cohen Milstein Sellers & Toll PLLC and Bernstein Litowitz Berger & Grossmann LLP.
The settlement is subject to approval by the court. The litigation is pending in the Southern District of New York, and is styled as In re Wells Fargo & Company Securities Litigation, Case No. 1:20-cv-04494-GHW.
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About Cohen Milstein Sellers & Toll
Cohen Milstein Sellers & Toll PLLC is a premier U.S. plaintiffs’ law firm, with over 100 attorneys handling high-profile and precedent-setting litigation. Through creative and tenacious advocacy, Cohen Milstein has recovered billions of dollars for defrauded investors.