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preliminary settlement of the proposed class action was filed
late Monday night with the federal court in Manhattan, and
requires a judge's approval. The dollar amount was suggested by
a mediator, court papers show.
Wells Fargo has operated since 2018 under consent orders from
the Federal Reserve and two other financial regulators requiring
that it improve governance and oversight.
The fourth-largest U.S. bank is also subject to an asset cap by
the Fed, which can impede its ability to compete with larger
rivals JPMorgan Chase & Co, Bank of America Corp and Citigroup
Inc.
Shareholders accused Wells Fargo of overstating how well it was
complying with those orders, and that the bank's market value
fell by more than $54 billion over two years ending in March
2020 as the shortcomings became known.
Wells Fargo did not immediately respond to requests for comment
outside business hours.
The San Francisco-based bank denied wrongdoing, and settled to
eliminate the burden and expense of litigation, court papers
show. Lawyers for the plaintiffs may seek up to 19% of the
settlement fund for legal fees.
Wells Fargo has since 2016 paid or set aside several billion
dollars to resolve regulatory probes and litigation concerning
its business practices.
These included that it opened about 3.5 million accounts without
customer permission, and charged hundreds of thousands of
borrowers for auto insurance they did not need.
Chief Executive Charlie Scharf has said repairing the reputation
of the 171-year-old bank founded by Henry Wells and William
Fargo has taken longer than he expected when he took over in
2019.
"When I arrived, we did not have the culture, effective
processes, or appropriate management oversight in place to
remediate weaknesses on a timely basis," he said in his March 3
letter to shareholders. "Today, we approach these issues
differently."
The case is In re Wells Fargo & Co Securities Litigation, U.S.
District Court, Southern District of New York, No. 20-04494.
(Reporting by Jonathan Stempel in New York; Editing by Simon
Cameron-Moore)
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