Wells Fargo
has agreed to a $1 billion settlement over a class-action lawsuit about its progress in recovering from its 2016 fake-accounts scandal.
It’s another reminder of the difficulties the lender has had in overcoming the scandal and competing with its largest peers.
The shareholder lawsuit alleged
Wells Fargo
(ticker: WFC) and former leadership misrepresented how quickly the bank had moved to tackle the scandal, subsequently weighing on its share price. A preliminary settlement was set out in a court filing Monday night and still needs to be approved in the coming months, The Wall Street Journal reported.
“This agreement resolves a consolidated securities class action lawsuit involving the company and several former executives and a director, who have not been with the company for several years. While we disagree with the allegations in this case, we are pleased to have resolved this matter,” said Laurie Kight, a spokeswoman for Wells Fargo, in an emailed statement.
If approved by the court, the $1 billion settlement will be among the top twenty class-action settlements over a securities case of all time, according to Cohen Milstein Sellers & Toll, the law firm representing the plaintiffs.
Wells Fargo is still feeling the consequences of the fake-accounts scandal in other ways, such as a continuing asset cap. The Federal Reserve put a $1.95 trillion limit on Wells Fargo’s assets in 2018, which leaves it lagging in size behind
JPMorgan Chase
(JPM), Bank of America (BAC) and Citigroup (C).
Wells Fargo shares were down 0.4% in premarket trading on Tuesday.
Write to Adam Clark at [email protected]
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