Wells Fargo settling accusations of defrauding shareholders for $1B

Wells Fargo has reached a $1 billion settlement with shareholders to resolve claims that the bank misled them about its compliance with several consent orders imposed by federal regulators.

The settlement agreement, which was filed on Monday, still requires a judge’s approval.

Shareholders filed the lawsuit against Wells Fargo in 2020, accusing the bank of making “materially false and misleading statements” about its compliance with the 2018 consent orders from the Federal Reserve, Consumer Fraud Protection Bureau and Office of the Comptroller of the Currency.

They alleged in their initial complaint that despite its claims, the bank had been “far from complying with the regulators’ directive, including repeatedly submitting insufficiently developed and inadequate remediation plans, struggling to meet deadlines, and failing to implement meaningful reforms.”

When the House Financial Services Committee released a report in 2020 detailing Wells Fargo’s failure to sufficiently respond in the wake of several consumer abuse scandals, the bank’s stock fell and the shareholders ultimately sued.

“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 in a statement. 

“While we disagree with the allegations in this case, we are pleased to have resolved this matter,” they added.