A settlement has been reached in a class-action lawsuit brought by shareholders against Wells Fargo & Co., reports Advisor Hub.
Wells Fargo agreed to pay $1 billion to compensate investors who said the company misled them about the progress it was making in revamping its practices in the wake of a fake accounts scandal in 2016.
The Securities and Exchange Commission said Wells Fargo opened millions of unauthorized or fraudulent customer accounts between 2002 and 2016 so employees could meet sales targets, and pressured customers into buying unnecessary products. Wells Fargo entered into consent orders with federal regulators to develop plans to avoid any further harm to consumers.
But the class-action suit, filed in 2020, claimed the bank and its top executives made misleading statements to Congress, investors and the media by saying regulators were satisfied with Wells Fargo’s progress. A report by a House Committee found that Wells Fargo had in fact not been complying with the consent orders.
Last week a Manhattan judge granted preliminary approval to the accord, which lawyers for the plaintiffs called one of the six largest securities class-action settlements of the last decade.
Wells Fargo said it disagreed with the investors’ allegations but was pleased to have resolved the matter. “This agreement resolves a consolidated securities class action lawsuit involving the company and several former executives and a director, who have not been with the company for several years,” said a company spokesperson.
An attorney for the plaintiffs said the settlement would help compensate hundreds of thousands of investors “whose critical retirement savings were impacted by Wells Fargo’s fraudulent business practices.”
The lawyers at Lewitas Hyman have extensive experience representing companies both large and small, as well as employees, directors, officers and shareholders, in complex commercial litigation matters pending in federal and state courts nationwide and in arbitrations before various dispute resolution forums.We pride ourselves on having respect for the courts and our adversaries while at the same time delivering top-tier work. Please contact us at (844) 651-2641 for more information about our securities and commercial litigation practice.