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SAN FRANCISCO (CN) — A federal judge tentatively approved an $85 million class action settlement in a lawsuit against Wells Fargo Thursday that will resolve claims the banking giant conducted fake job interviews in order to meet its diversity hiring policy.
Wells Fargo shareholders sued in 2022 after a New York Times’ article revealed the bank conducted interviews the bank conducted with women and people of color, among other diverse candidates for jobs paying more than $100,000 a year, even though the positions were already filled and the bank had no intention to offer a job to the candidate.
The news caused Wells Fargo’s shares to drop, and investors filed securities lawsuits, claiming the bank had lied to them about its efforts to promote diversity in its ranks, and derivative lawsuits on behalf of the bank, accusing directors and officers of breaching their fiduciary duty.
U.S. District Judge Trina Thompson of the Northern District of California, a Joe Biden appointee, preliminarily approved the settlement Thursday. Representatives for both parties did not immediately respond to a request for comment.
The parties reached the settlement in September, six months before the case was scheduled to go to trial in March.
The class includes “all persons and entities who purchased or otherwise acquired Wells Fargo & Company common stock between February 24, 2021, and June 9, 2022, inclusive, and were damaged thereby.”
Compensation will be available for class members who “suffered economic losses related to the difference between the actual purchase price and sale price of Wells Fargo common stock” during the class period. Claimants will receive mail or an email with instructions on how to obtain the settlement funds. Only claims above $10 will be distributed.
Class members who receive an award will be “permanently barred and enjoined from bringing any action against all defendants” with respect to the released claims.
The plaintiffs’ attorneys in the case requested no more than 25% of the settlement amount, or $21.25 million, to cover fees, and an additional $3.5 million for litigation costs. Class representatives may be awarded up to $40,000 each to cover their time and costs related to their representation.
After subtracting expenses, the plaintiffs estimate $59.05 million of the settlement total will be distributed to the class. If all class members participate, the estimated average recovery will be $0.056 per eligible share of Wells Fargo common stock.
Additional funds that are not cost-effective to redistribute to class members will be donated to the Council of Institutional Investors Research and Education Fund, a nonprofit that educates the public and other stakeholders on topics of interest to long-term investors.
Class notices are expected to be sent out by Nov. 26. Final approval of the settlement is scheduled for May 5, 2026.
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