Wells Fargo has agreed to pay $1 billion to settle a lawsuit alleging the bank misled shareholders over its progress on addressing a “fake accounts” scandal from 2016.
The bank was fined $185 million in 2016 for a “widespread illegal” sales practice which involved opening up two million deposit and credit-card accounts without prior knowledge or consent of its customers.
The US Federal Reserve and two other regulators placed consent orders on America’s fourth largest bank in 2018 requiring it to improve governance and oversight measures.
The lawsuit from shareholders alleged that Wells Fargo was overstating the degree to which it was complying with the orders, claims which it has denied.
According to the Wall Street Journal, Wells Fargo’s slow progress in addressing the 2016 scandal became clear in 2020 and resulting impact on the bank’s stock-price impacted its shareholders.
Rhode Island general treasurer James A. Diossa, whose pension fund is a co-lead plaintiff in the case, reportedly said in a statement that Wells Fargo “betrayed the trust” of Rhode Island pensioners and was rightly facing the consequences.
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