Wells Fargo agrees to pay shareholders $1 billion to settle lawsuit
Conrad Hoyt
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Wells Fargo agreed to pay shareholders $1 billion to settle a lawsuit where it was accused of exaggerating its progress in recovering from a scandal from eight years ago.
The bank’s shareholders claimed Wells Fargo and its past leadership misled them about how they fixed their management issues in the wake of failing to prevent the bank from opening up a plethora of phony accounts, according to the Wall Street Journal.
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The preliminary settlement was filed Monday night and must still be approved in the coming months. It would reportedly be the 17th-largest settlement in a class action brought by shareholders.
Consent orders from the Federal Reserve and two other financial regulators have required Wells Fargo to improve its governance and oversight since 2018, per Reuters. The fourth-largest bank in the United States also faces an asset cap by the Fed, which can halt its ability to compete with its rivals.
Wells Fargo has faced other legal troubles in recent months. In February, a Wells Fargo female vice president from Los Angeles sued the company and coworkers for sexual harassment and rape, claiming that the bank failed to protect her from a “grossly hostile work environment” and retaliated against her when she came forward with allegations.
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And in December, the bank reached a $3.7 billion agreement with federal regulators over allegations that it harmed millions of customers through consumer law violations.
Wells Fargo was ordered by the Consumer Financial Protection Bureau to repay $2 billion to consumers and was slapped with a $1.7 billion fine, the largest financial penalty ever against a bank by the CFPB.