Wells Fargo makes record $240m settlement over fake bank accounts
Wells Fargo officials have reached a record $240 million settlement with US shareholders over the creation by bank employees of millions of unauthorised customer accounts.
According to Reuters, the settlement disclosed yesterday (28 February) requires insurers for 20 current and former Wells Fargo executives and directors, including CEO Tim Sloan and his predecessor John Stumpf, to pay the $240 million to the bank.
As FinTech Futures reported in 2017, the bank created 3.5 million fake bank accounts and credit card numbers to boost sales figures. Wells Fargo also fired at least 5,300 employees who were involved in the shady deals.
In the latest chapter, the bank resolves claims that the officials breached their fiduciary duties by knowing about or consciously disregarding the bogus accounts, and failing to stop their creation.
The officials denied wrongdoing in agreeing to the settlement filed with the federal court in San Francisco, where Wells Fargo is based.
Lawyers for the shareholders called the accord “the largest insurer-funded cash settlement in a US shareholder derivative lawsuit”.
The settlement requires a judge’s approval. It follows Wells Fargo’s $480 million settlement in May 2018 of a securities fraud lawsuit by shareholders raising similar claims. The shareholders were led by pension plans in Alabama and Colorado.
Wells Fargo declined to comment.
The bank has been facing a number of scandals since September 2016 in several business lines over its treatment of customers, often caused by employees under pressure to meet sales quotas.
This week, it said it might have to pay up to $2.7 billion more than it had set aside to resolve legal matters, up from $2.2 billion three months earlier.
In other bad news, last month the bank was “experiencing system issues due to a power shutdown at one of our facilities, initiated after smoke was detected following routine maintenance”.