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Judge approves settlement in lawsuit over Wells Fargo unauthorized accounts

On Behalf of | Sep 20, 2023 | Financial News

A federal judge has approved a settlement in which Wells Fargo will pay $1 billion to the plaintiffs in a class-action lawsuit, AdvisorHub reports.

Under the accord, authorized last week by US District Judge Jennifer L. Rochon, Wells Fargo agreed 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.

The approval of the settlement by Judge Rochon followed a court hearing in New York. Lawyers for the plaintiffs called it one of the six largest securities class-action settlements of the last decade.

After the settlement was reached in May, 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.

The proceeds of the settlement will go to investors who bought Wells Fargo stock from Feb. 2, 2018, through March 12, 2020.

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