Wells Fargo Settles Securities Fraud Class Action for $480 Million--Update
May 04 2018 - 6:05PM
Dow Jones News
By Emily Glazer
Wells Fargo & Co. said Friday it reached a $480 million
preliminary settlement agreement in a securities fraud class-action
suit.
The settlement comes at a difficult time for Wells Fargo, which
is dealing with multiple investigations and settlements. The
problems kicked off in September 2016 when its sales-practices
scandal erupted, and the bank later disclosed it opened up to 3.5
million sham retail banking customer accounts.
Wells Fargo said the amount was fully accrued for as of March
31.
Last month, Wells Fargo settled with two of its key regulators
for $1 billion over its failure to manage risk, particularly in its
auto-lending and mortgage businesses. That caused it to adjust its
first-quarter earnings down $800 million. And in February the
Federal Reserve capped the bank's assets in an unprecedented
enforcement action, also relating to its inability to manage
risk.
The $480 million settlement is to resolve a class-action in
federal court in the Northern District of California. It is subject
to final approval by the court.
Union Investment, a European asset-management firm and the
court-appointed lead plaintiff in the lawsuit, alleged that Wells
Fargo and certain current and former officers and directors of the
bank made false statements and "artificially inflated" Wells
Fargo's stock price from February 2014 through September 2016.
The bank said Friday that it "denies the claims and allegations
in the action and entered into the agreement in principle to avoid
the cost and disruption of further litigation."
Wells Fargo CEO Timothy Sloan said in the statement that the San
Francisco-based bank believes "that moving to put this case behind
us is in the best interest of our team members, customers,
investors and other stakeholders."
Union executive board member Dr. Andreas Zubrod released a
statement saying: "We take action to rectify misconduct that raises
significant public policy concerns and severely harms public stock
market investors."
Write to Emily Glazer at emily.glazer@wsj.com
(END) Dow Jones Newswires
May 04, 2018 17:50 ET (21:50 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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