SAN FRANCISCO–Executives and directors with Wells Fargo have reached a $240-million settlement in a shareholder lawsuit related to the bank’s bogus accounts
scandal.
The settlement in a federal court in San Francisco, which still requires a judge’s approval, would resolve allegations the bank’s officials breached their fiduciary duties by knowing about or consciously disregarding the bogus accounts, and failing to stop their creation.
The massive scandal, which involved the creation of more than three-million fake accounts by front-line staff attempting to meet aggressive sales goals, eventually led to the firing of more than 5,000 bank employees. Several top executives also eventually resigned, including its CEO. Now the current CEO, as well as his predecessor John Stumpf, will pay the $240 million as part of the settlement, most of which will be paid by insurers.
The latest deal is one of a multitude of settlements by Wells Fargo over its practices, which went beyond the fake account scandal to involve numerous other illegal practices.
Wells Fargo has been attempting to resurrect its image with a new advertising campaign that features its own employees.
Nevertheless, last week Wells Fargo said it might have to pay to $2.7 billion more than it had set aside as of Dec. 31 to resolve legal matters, up from $2.2 billion three months earlier. Wells Fargo continues to operate under an asset growth cap put in place by the Federal Reserve.