May 15, 2023
Shareholders claimed the bank and its past leadership were moving slower to address regulatory issues than they acknowledged publicly
Wells Fargo agreed to pay shareholders $1 billion to settle a class-action lawsuit that accused the bank of overstating its progress in cleaning up after its 2016 fake-accounts scandal.
The bank’s shareholders alleged Wells Fargo and its past leadership misled them about how swiftly they were fixing the governance issues and risk-management systems that failed to prevent the bank from opening up perhaps millions of phony accounts.
After the 2016 scandal led to a series of regulatory rebukes, the bank moved slower to address the problems than it suggested publicly, the plaintiffs alleged. When the sluggish pace became clear in 2020, the plaintiffs said, stock-price declines cost shareholders, including mutual funds and pension funds.
The preliminary settlement, outlined in a court filing Monday night, still must be approved in the coming months. It would likely be the 17th-largest settlement in a class action brought by shareholders, according to the filing.
“Wells Fargo betrayed the trust of Rhode Island pensioners and now is rightly facing consequences because of that,” James A. Diossa, general treasurer of Rhode Island, whose pension fund is a co-lead plaintiff in the case, said in a statement.
The complete story can be read on The Wall Street Journal (subscription required).