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In
a decision on Friday, U.S. District Judge Trina Thompson in San
Francisco said that while reasonable investors would not expect
Wells Fargo to conduct interviews for jobs that had already been
filled, shareholders failed to show that fake interviews were
widespread or even took place.
Thompson also found no proof that Chief Executive Charlie Scharf
and two senior diversity executives should have known about the
sham interviews, or that Wells Fargo's years of costly scandals
including from the creation of "fake" customer accounts should
have put them on alert.
The plaintiffs in the proposed class action must "allege more
than that the sham interviews were an open secret," Thompson
wrote. "While Wells Fargo's history provides some context for
the allegedly misleading statements, it is not sufficient to
confer [intent to defraud]."
Lawyers for the plaintiffs did not immediately respond on Monday
to requests for comment. Wells Fargo did not immediately respond
to similar requests.
The plaintiffs had claimed that San Francisco-based Wells Fargo
inflated its stock price through nine public statements
discussing its "diverse slates" guidelines.
Adopted in 2020, the policy called for at least 50% of
candidates interviewed for jobs paying at least $100,000 to be
minorities, women or people in other disadvantaged groups.
Wells Fargo's share price fell 10.2% over two days in June 2022,
wiping out more than $17 billion of market value, after the New
York Times said federal prosecutors in Manhattan had begun a
criminal probe into the sham interviews. The probe has yet to
result in charges or a resolution.
The case is SEB Investment Management AB et al v Wells Fargo &
Co, U.S. District Court, Northern District of California, No.
22-03811.
(Editing by Kirsten Donovan)
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