Wells Fargo has agreed to pay $1 billion to settle a class-action lawsuit filed by shareholders who accused the bank of misleading them about its progress in recovering from a series of scandals.
The lawsuit, which was filed in 2020, alleged that Wells Fargo had overstated how quickly it was cleaning up its act after employees opened millions of fake accounts in customers’ names in order to meet sales goals. The bank was fined $185 million by regulators in 2018 and forced to enter into a consent order that limited its growth and required it to improve its oversight and governance.
The shareholders who filed the lawsuit alleged that Wells Fargo’s management had made misleading statements about the bank’s progress in recovering from the scandal in order to keep their jobs and boost the bank’s stock price.
Under the terms of the settlement, Wells Fargo will pay $1 billion to the shareholders who filed the lawsuit. The money will be distributed to shareholders who owned Wells Fargo stock between October 2016 and October 2018.
The settlement is subject to approval by a federal judge.
The settlement is the latest in a series of legal setbacks for Wells Fargo. The bank has also been sued by customers who were harmed by the fake accounts scandal, and it is still under investigation by regulators.
The scandal has damaged Wells Fargo’s reputation and has made it more difficult for the bank to attract new customers and investors. The settlement is a sign that Wells Fargo is still struggling to recover from the scandal, and it remains to be seen whether the bank will be able to fully rebuild its reputation.
In addition to the $1 billion settlement, Wells Fargo has also agreed to make a number of changes to its corporate governance and oversight practices. These changes are designed to prevent another scandal from happening in the future.
The changes include the creation of a new board committee to oversee the bank’s compliance with laws and regulations, and the appointment of a new chief compliance officer. Wells Fargo has also agreed to implement a new training program for employees on ethics and compliance.
The changes are a step in the right direction, but it remains to be seen whether they will be enough to prevent another scandal from happening at Wells Fargo. The bank has a long history of problems with its corporate culture, and it will take more than a few changes to fix the problems.
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