Wells Fargo to pay $1B settlement for 2016 scandal
According to the Associated Press, Wells Fargo has agreed to a pay $1 billion to settle a lawsuit filed by its shareholders, who alleged the bank made misleading statements about its compliance with federal regulators after a fake account-opening scandal came to light in 2016.
The class-action lawsuit was filed on behalf of hundreds of thousands of public employees of Rhode Island and Mississippi whose retirement funds had invested in Wells Fargo. A federal judge in New York on Tuesday granted preliminary approval of the settlement that was filed late Monday.
Wells Fargo has been sanctioned repeatedly by U.S. regulators for violations of consumer protection laws going back to 2016, when employees were found to have illegally opened millions of accounts to meet unrealistic sales goals. The actions by Wells’ employees caused damage to customers’ credit scores and cost some of them money in fees.
The bank remains under a Federal Reserve order that forbids the bank from growing any larger until the Fed deems that its internal oversight problems are resolved. That order, originally enacted in 2018, was expected to last only a year or two.
Since the fake accounts scandal came to light in 2016, Wells has paid out billions in fines to state and federal regulators, reshuffled its board of directors, and seen two CEOs and other top-level executives leave the company. Wells Fargo’s reputation has never fully recovered from the sales scandal.
Shares in Wells Fargo ended Tuesday down about 1% at $38.39, approaching 2023 lows.