SAN FRANCISCO (CN) – A federal judge on Tuesday gave his final blessing to a $480 million deal to resolve claims that Wells Fargo misled investors about a costly sham accounts scandal that tarnished the bank’s reputation.
The settlement applies to those who purchased stock in the San Francisco-based bank between Feb. 26, 2014, and Sept. 20, 2016. Each investor will get about $0.35 per share after attorneys’ fees are deducted from the settlement fund.
U.S. District Judge Jon S. Tigar approved the class attorneys’ request for $95.9 million in fees, finding it reasonable to award them 20 percent of the $480 million settlement fund.
“Plaintiffs’ counsel obtained an excellent result for the class when compared to similar cases, despite comparable risks,” Tigar wrote in his 26-page ruling.
“We are pleased to put this matter behind us,” Wells Fargo spokesman Peter Gilchrist told Courthouse News. “As the settlement makes clear, Wells Fargo did not admit or deny the plaintiffs’ allegations.”
Lead plaintiff Gary Hefler sued Wells Fargo in September 2016, claiming its executives and board of directors misled investors about bank employees opening fake accounts in customers’ names to meet aggressive sales quotas.
The lawsuit was consolidated with other class actions into one case. The shareholders claimed the board was put on notice about the scandal by “numerous red flags,” including warnings from employees, prior litigation, internal reports, investigations by regulators, and an L.A. Times exposé in 2013.
Wells Fargo acknowledged last year that its employees opened some 3.5 million unauthorized accounts, sometimes forging customers’ signatures, to meet unrealistic sales goals.
In September 2016, the bank said it was getting rid of its sales quotas for credit cards and other banking products after federal regulators slammed it with $185 million in fines.
The $480 million shareholder deal follows a separate $142 million settlement with bank customers who had phony accounts opened in their names, often resulting in fees, from 2002 to 2017. That deal was approved in June.
And earlier this year, the bank was fined a record $1 billion for charging auto and home loan customers millions of dollars in unwarranted fees.
Lead class attorney Shawn Williams of Robbins Geller Rudman & Dowd in San Francisco did not immediately return emails seeking comment Tuesday afternoon.
The third largest U.S. bank in assets, Wells Fargo generated $102 billion in revenue last fiscal year and was valued at $265 billion as of June 2018, according to Forbes.