May 16, 2023
Several pension funds had accused the bank of misleading investors about the extent of its reform efforts after the 2016 fake-accounts scandal
Wells Fargo has agreed to pay $1 billion to settle a class-action lawsuit brought on by shareholders who had accused the lender of overstating the progress of reforms initiated after the 2016 fake-accounts scandal.
The settlement was filed late Monday in federal court in Manhattan, where litigation had been in progress for three years. If it secures the judge’s approval, it would be among the 20 largest securities class-action deals on record, according to plaintiffs.
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The class-action lawsuit was led by pension administrators in Rhode Island and Mississippi, who said their holdings were affected by the bank’s misleading statements.
“The pension fund lost money because of their lies, so we’re holding them accountable,” Rhode Island General Treasurer James Diossa said in an interview Tuesday.
He added that he hoped the settlement would cause the bank to be more careful about future statements to investors.
“I strongly believe that this is an important case historically, too, because it’s going to help shape the next years to come for Wells Fargo and their behavior,” Diossa said.
Laura Posner, an attorney with the law firm Cohen Milstein, which represented the plaintiffs, called the settlement “quite impressive” in terms of what the plaintiffs thought realistic damages were. “More broadly, it is hopefully a way of deterring … other companies from engaging in fraud,” Posner said.
Read Wells Fargo Agrees to $1 Billion Shareholder Settlement.