Wells Fargo to pay $1 bn to settle shareholder class action

US bank Wells Fargo has agreed to pay $1 billion to settle a class action lawsuit by shareholders who accused it of not having changed its management and practices quickly enough after a series of scandals.

The agreement has been submitted to a federal judge in Manhattan for approval, according to a document filed Monday.

In June 2020, a group of shareholders, including Sweden's Handelsbanken Fonder AB and the Louisiana Sheriffs' Pension & Relief Fund, launched a class action against the San Francisco-headquartered bank.

Their lawsuit accused Wells Fargo of shortcomings in strengthening its risk control and compliance following commitments made to regulators in 2018.

At the time, the Federal Reserve had forced the bank to submit a plan to take control of the management, accompanied by a temporary asset cap following a series of compliance problems.

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The Fed's punitive restrictions followed a series of scandals over abuses at the bank, including opening millions of fake accounts and charging unnecessary insurance premiums to more than half a million customers on their car loans.

In March 2020, a report by the House Financial Services Committee accused the bank of not having started real reform of its governance and of not complying with the Fed's directives in terms of risk management and compliance.

In September 2021, the bank was hit with a new fine of $250 million for failing to meet requirements in an agreement to pay previously harmed customers in the fake accounts scandal.

Since 2016, Wells Fargo has paid billions in settlements and financial penalties related to its business practices.

Source: AFP