Wells Fargo & Co has decided to pay $1 billion to settle the court agreement.
This agreement concerns legal proceedings on the fact of allegations of deception of shareholders regarding the recovery after a series of scandals related to the practice of interaction with customers.
A preliminary agreement on the proposed class action was filed on Monday, May 15, in Manhattan Federal Court and requires the approval of a judge. According to the information contained in the court documents, the settlement amount was offered by an intermediary.
Wells Fargo has been operating since 2018 in accordance with the orders of the Federal Reserve System and two other financial regulators, which require improved oversight practices and management processes.
The fourth largest US bank is also subject to the Fed’s asset restriction. This circumstance may limit its ability to compete with larger competitors, including JPMorgan Chase & Co (JPM), Bank of America Corp (BAC), and Citigroup Inc (C).
Shareholders accused Wells Fargo that the financial institution provided them with false information about compliance with regulatory requirements. The charges also relate to a drop in the lender’s market value by more than $ 54 billion over two years amid the publication of data on deficiencies.
The bank, based in San Francisco, did not recognize the fairness of the charges and decided to remove the burden of the costs of the trial. The relevant information is contained in court documents. Plaintiffs’ lawyers have the opportunity to claim up to 19% of the amount of compensation for court costs.
Since 2016, Wells Fargo has paid or set aside several billion dollars to settle regulatory reviews and lawsuits over the lender’s business practices. Claims to this practice are based on the fact that the bank opened about 3.5 million accounts without the permission of customers and charged hundreds of thousands of borrowers for car insurance, which they did not need.
The chief executive officer of the financial institution, Charlie Scharf, said that restoring the reputation of the lender with a 171-year history took longer than his expectations when taking office in 2019. He noted that until 2019, the lender did not have a culture, effective processes, or proper management supervision to quickly eliminate deficiencies.
As we have reported earlier, U.S. Fines Wells Fargo Nearly $100 Million.