Wells Fargo has agreed to pay $1 billion to settle a class action lawsuit accusing the bank of overstating how great strides it has made in addressing unlawful practices that regulators say are killing millions would have harmed customers.
The agreement, detailed in court filings on Monday, is the latest in a series of settlements and penalties paid by the bank in connection with a massive fraud that came to light almost a decade ago. From 2002 to 2016, bank employees opened millions of accounts on behalf of customers without their bosses’ knowledge in the face of unrealistic sales targets.
Wells Fargo fired top executives and promised regulators to fix the internal failings that caused the scandal and other practices that put customers at risk.
The latest settlement settles a lawsuit filed on behalf of shareholders that focused on the bank’s behavior between 2018 and 2020 after regulators identified many of the issues. The plaintiffs, including pension funds in Mississippi, Rhode Island and Louisiana, said Wells Fargo defrauded investors by giving the false impression that it was further along in complying with regulators’ orders than it disclosed at the time. The Wall Street Journal previously reported on the settlement, which must be approved by a federal judge in New York.
Wells Fargo, which could not be immediately reached for comment, said it is working to resolve the issues that led to the lawsuits and regulatory penalties.
Wells Fargo has been plagued by controversies for years, including bogus accounts, improper mortgage modifications and accidental disclosure of customer information.
In December, the bank agreed to pay $3.7 billion to settle claims from the Consumer Financial Protection Bureau, which had accused it of a series of banking violations. Wells Fargo agreed to pay $3 billion in 2020 to settle consumer abuse investigations that have dragged on for more than a decade.
In the past seven years, the bank’s chief executive has been ousted twice: John G. Stumpf in 2016 and Timothy Sloan in 2019. A top executive, Carrie L. Tolstedt, pleaded guilty in March to a criminal complaint related to the bogus accounts scandal and it face up to 16 months in prison.