Well, it’s been about two months since Wells Fargo reached a nine-figure settlement over its recent scandals, and that means it must be time for another one.
The bank revealed this week that it agreed to a new $240 million settlement over claims that its executives did not do enough to address the issues that led to the bank’s massive fake accounts scandal.
But unlike the bank’s previous settlements over the fake accounts situation, this settlement will see the bank get the money instead of paying it out.
Previously, the bank was fined $150 million by the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency, and the city and county of Los Angeles 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.
That led to a class action lawsuit being brought on behalf of the bank’s customers who had fake accounts opened in their names, which the bank eventually settled for $142 million.
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. And last year, the bank agreed to a $480 million settlement with those shareholders.
But now, the bank is set to get some of that money back, thanks to a newly agreed-to settlement.
The new settlement stems from another shareholder lawsuit. This one is a derivative lawsuit that claims that Wells Fargo executives and board members failed in the fiduciary duty by not detecting or preventing the sales practices that led to the fake accounts being opened.
This is how the plaintiffs’ attorneys describe the Wells Fargo executives’ alleged conduct: “The Derivative Action alleges, among other things, that certain current and former officers and directors of Wells Fargo knew or consciously disregarded that Wells Fargo’s employees were illicitly creating millions of customer accounts without those customers’ knowledge or consent, thereby breaching their fiduciary duties to Wells Fargo in connection with these and other alleged improprieties.”
According to a filing with the Securities and Exchange Commission, the parties in the suit have reached an agreement that will see insurance carriers pay Wells Fargo $240 million for the alleged damage to the company, while the company will pay the plaintiffs’ legal fees.
The settlement is subject to final approval from the court overseeing the lawsuit.
When contacted for additional comment, Wells Fargo referred HousingWire to its SEC filing.