SAN FRANCISCO (CN) – Wells Fargo has announced it will pay shareholders $480 million to settle claims related to its phony accounts scandal.
“We are pleased to reach this agreement in principle and believe that moving to put this case behind us is in the best interest of our team members, customers, investors and other stakeholders,” Wells Fargo CEO Tim Sloan said in a statement Friday. “We are making strong progress in our work to rebuild trust, and this represents another step forward.”
Lead plaintiff Gary Hefler sued Wells Fargo in September 2016, claiming its executives and board of directors misled investors about a sham accounts scandal that cost the bank more than $300 million in penalties and untold reputational harm.
Wells Fargo acknowledged last year that its employees opened some 3.5 million unauthorized accounts, sometimes forging customers’ signatures, to meet aggressive sales quotas.
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. In October 2017, U.S. District Judge Jon Tigar refused to dismiss the class action complaint filed against the bank, its board of directors and senior executives.
In September 2016, the bank said it was getting rid of its sales goals for credit cards and other banking products, after federal banking regulators slammed it with $185 million in fines.
Wells Fargo, the country’s third largest bank in assets, has also agreed to pay $142 million to settle claims with customers who had unauthorized accounts opened in their names. A hearing for a motion for final approval of that settlement is scheduled for May 30 in San Francisco. Plaintiffs in that case also seek another $21.7 million in attorneys’ fees and costs.
The announcement of the shareholder deal comes after Wells Fargo was fined a record $1 billion on April 20 for charging auto and home loan customers millions of dollars in unwarranted fees.
Shawn Williams, a shareholder plaintiffs’ attorney from Robbins Geller Rudman & Dowd in San Francisco, did not immediately return a phone call seeking comment Monday morning.
The bank and shareholders have not yet filed a motion for approval of the $480 million deal.