Wells Fargo & Co has agreed to pay $1 billion to settle a lawsuit accusing it of defrauding shareholders about its progress in recovering from a series of scandals over its treatment of customers.
Shareholders accused Wells Fargo of overstating how well it was complying with those orders, and that the bank's market value fell by more than $54 billion over two years ending in March 2020 as the shortcomings became known.The San Francisco-based bank denied wrongdoing, and settled to eliminate the burden and expense of litigation, court papers show. Lawyers for the plaintiffs may seek up to 19% of the settlement fund for legal fees.
Wells Fargo has since 2016 paid or set aside several billion dollars to resolve regulatory probes and litigation concerning its business practices. These included that it opened about 3.5 million accounts without customer permission, and charged hundreds of thousands of borrowers for auto insurance they did not need.
Chief Executive Charlie Scharf has said repairing the reputation of the 171-year-old bank founded by Henry Wells and William Fargo has taken longer than he expected when he took over in 2019. "When I arrived, we did not have the culture, effective processes, or appropriate management oversight in place to remediate weaknesses on a timely basis," he said in hisThe case is In re Wells Fargo & Co Securities Litigation, U.S. District Court, Southern District of New York, No. 20-04494.
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