Wells Fargo & Co. agreed to pay $1 billion to settle a shareholder lawsuit that accused it of making misleading statements about its compliance with federal consent orders following the 2016 scandal involving the opening of unauthorized customer accounts.
The settlement is one of the top six largest securities class-action settlements of the past decade, according to lawyers for the investors, who on Tuesday won preliminary approval of the accord from a Manhattan judge.
The investors sued the bank in 2020 claiming that its former chief executive, Tim Sloan, and other executives made misleading statements in testimony before Congress and to investors and the media.
The investors alleged that the executives presented too rosy a scenario about their interactions with regulators, including not disclosing that their initial reform plans had been rejected by authorities.
The proceeds of the settlement will go to investors who bought Wells Fargo stock from Feb. 2, 2018, through March 12, 2020.
“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,” a Wells Fargo spokesperson said. “While we disagree with the allegations in this case, we are pleased to have resolved this matter.”
The news was reported earlier by the Wall Street Journal.
The accord follows a previous settlement four years ago over the bank’s fake-accounts scandal with executives and directors valued at $320 million and a 2018 shareholder accord that cost the company $480 million. In 2020, Wells Fargo agreed to pay $3 billion to settle U.S. investigations into more than a decade of widespread consumer abuses under a deal that let the bank avoid criminal charges.
While the sales abuses had been described repeatedly in earlier probes, the 2020 settlement provided more details on the high-pressure environment that led legions of low-level employees to break the law — often costing them their jobs when they were caught by the firm’s internal controls. Many inside the bank referred to abusive sales practices as “gaming,” according to prosecutors at that time.
Rajesh Markan earlier this year pleaded guilty to one count of criminal fraud related to his sale of fake investments to 10 clients totaling $2.9 million.
From building trust to steering through emotions and responding to client challenges, new advisors need human skills to shape the future of the advice industry.
"The outcome is correct, but it's disappointing that FINRA had ample opportunity to investigate the merits of clients' allegations in these claims, including the testimony in the three investor arbitrations with hearings," Jeff Erez, a plaintiff's attorney representing a large portion of the Stifel clients, said.
Chair also praised the passage of stablecoin legislation this week.
Maridea Wealth Management's deal in Chicago, Illinois is its first after securing a strategic investment in April.
Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.
Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.
