Bernstein Litowitz Berger & Grossmann LLP and Cohen Milstein Sellers & Toll PLLC won their bid to lead a proposed securities class action over Wells Fargo's allegedly woeful progress on overhauling its risk management policies.
U.S. District Judge Gregory H. Woods on Saturday appointed a set of institutional investors as lead plaintiff in the litigation filed earlier this summer over stock drops that followed a scathing House Financial Services Committee Democrats staff report accusing the bank's top brass of a litany of oversight failures.
Represented by Bernstein Litowitz and Cohen Milstein, the investor set alleged to have lost a collective $39.7 million as a result of the dips, which led other lead plaintiff contenders to either withdraw their motions for consideration or decline to argue against the investor set's appointment.
Filed on June 11 in New York federal court, the lawsuit calls attention to two share price tumbles in March, one just after the House committee said in a March 4 report that Wells Fargo "continues to struggle to implement effective risk management and remediation programs," and the other on the day after a recently resigned director testified that the bank's board was aware of management's failure to adequately respond to regulatory consent orders related to a series of scandals that have plagued it since 2016.
. . .
The House committee's majority staff report detailed findings from a year-long investigation into Wells Fargo's progress under regulatory consent orders directing the California-based banking giant to strengthen its compliance and compensate consumers.
The consent orders covered in the report are the agreements that Wells Fargo reached in 2016 with the OCC and CFPB over claims that bank employees had created millions of unauthorized, fraudulent customer accounts in order to meet aggressive sales targets, as well as the consent order it reached with the Federal Reserve in February 2018 and two additional orders reached with the OCC and CFPB in April 2018.
The investor suit starts its proposed class period when the Federal Reserve consent order was announced on Feb. 2, 2018, and alleges that despite the conditions set by all three of the 2018 consent orders, Wells Fargo never disclosed to investors that its plans to enhance oversight and governance were incomplete and inadequate.
These failures were then exposed by the House committee report, which caused Wells Fargo's share price to drop more than 10% over two trading days, from $41.40 on March 4 to $37.09 on March 6, the investors allege.
Then on March 10, two days after bank directors Elizabeth Duke and James Quigley resigned from the board, Duke and Quigley testified before the House Financial Services Committee about the bank's compliance with the consent orders. That same day, Financial Services Committee Chairwoman Rep. Maxine Waters requested that the U.S. Department of Justice investigate resigned Wells Fargo CEO Timothy J. Sloan for allegedly lying in his public testimony a year earlier about the bank's compliance with the consent orders.
On this news, the share price fell more than 20% over two trading days, from $34.63 per share to $27.20 per share, according to the complaint.
Bernstein Litowitz and Cohen Milstein are representing Handelsbanken Fonder AB, the Louisiana Sheriffs' Pension & Relief Fund, Employees' Retirement System of Rhode Island, and Public Employees' Retirement System of Mississippi.
The investors are represented by Hannah Ross, Jeroen van Kwawegen and Avi Josefson of Bernstein Litowitz Berger & Grossman LLP and Steven J. Toll, S. Douglas Bunch, Molly J. Bowen and Laura H. Posner of Cohen Milstein Sellers & Toll PLLC.
The complete article can be viewed here.