Wells Fargo will pay $480 million to a group of the bank’s shareholders as part of a class action settlement for allegedly lying about the sales practices that led to the bank’s massive fake accounts scandal.
The settlement stems from actions taken in 2016 by the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency, and the city and county of Los Angeles to fine the bank $150 million for more than 5,000 of the bank’s former employees opening as many as 2 million fake accounts in order to get sales bonuses.
The action also led to class action lawsuit being brought on behalf of the bank’s customers who had a fake account opened in their name. That lawsuit led to a $142 million fake accounts class action settlement for those customers.
But they weren’t the only ones who sued.
A group of the bank’s shareholders also sued the bank, claiming that the bank and its executives made “misrepresentations and omissions” about the bank’s “cross-selling” business model, where bank employees were rewarded for getting customers to open up multiple accounts.
Those rewards and bonuses led to employees opening up fake accounts in customers’ names in order to get bonuses.
The shareholders claimed that bank committed securities fraud by not being wholly honest in its statements about its sales practices.
And earlier this year, the bank agreed to a settlement that will see the bank pay $480 million to those shareholders.
And now, a federal judge has given final approval to the settlement, which means that those shareholders will soon see their share of the $480 million payout.
According to the bank, the settlement class covers all persons and entities that purchased Wells Fargo common stock from Feb. 26, 2014 through Sept. 20, 2016.
“Wells Fargo is pleased the case has received final approval by the court,” the bank said in a statement. “The company remains focused on rebuilding trust and transforming into the most customer-focused, efficient, and innovative Wells Fargo ever, for all of its stakeholders.”
Wells Fargo said that fully accrued the settlement amount earlier this year, and paid that amount into a settlement escrow.
Wells Fargo also said that it maintains its denial of the claims and allegations made by the shareholders, but settled the lawsuit in order to “avoid the cost and disruption of further litigation.”
Eligible shareholders have until Jan. 23, 2019 to submit their claim to take part in the settlement.