Wells Fargo Agrees To Pay $300 Million To Resolve Shareholder Lawsuit
According to a report from Fox Business, Wells Fargo—the San Francisco-based financial services giant—has agreed to pay approximately $300 million to settle a shareholder lawsuit. The settlement is focused on issues related to auto insurance disclosures. Wells Fargo was sanctioned by U.S. regulators for consumer protection violations related to its auto insurance business. Here, our Miami shareholder dispute attorneys highlight the key things to know about the case and the settlement.
Background: Wells Fargo Faced Sanctions for Pushing Auto Insurance on Customers
In 2017, Wells Fargo came under public scrutiny for allegedly charging customers for auto insurance that they did not need or want. The issue arose because Wells Fargo required certain borrowers to maintain comprehensive and collision insurance on their vehicles, which is typical for auto loans. However, in many cases, the bank force-placed insurance on borrowers, even though they already had their own insurance. In 2018, Wells Fargo entered into a more comprehensive settlement with federal regulators, through which it paid more than $1 billion to resolve issues related to its auto insurance practices and other issues.
Pension Fund Sued Wells Fargo for Shareholder Rights Violations
Following the financial sanctions imposed against Wells Fargo by the U.S. government, the financial services company was sued by the Construction Laborers Pension Trust for Southern California. Among other things, the shareholder lawsuit alleged that top executives at the company misled investors in 2016 when they knew or should have known that the company faced a significant liability risk for potential consumer protection violations related to its auto insurance products. Specifically, the lawsuit sought damages on behalf of investors who purchased shares between November of 2016 (when an inquiry was initiated by the United States Senate) and August of 2017 (when allegations against Wells Fargo went public). In the class action shareholder lawsuit, the representative plaintiff contends that shareholders were damaged because of the improper conduct of Wells Fargo management.
Shareholder Litigation Settlement Reached, Still Needs Court Approval
As reported by Fox Business, a $300 million settlement has been reached in the case against Wells Fargo. The company has not admitted any wrongdoing as part of this preliminary settlement agreement. Notably, as it is a class action lawsuit, the settlement still needs to be approved. It requires the approval from the United States District Court Judge James Donato. A trial has been scheduled to begin in the class action shareholder litigation on February 27th, 2023.
Speak to Our Miami Shareholder Dispute Attorney for Immediate Help
At Pike & Lustig, LLP, we are adept in handling complex shareholder litigation. If you are involved in a shareholder dispute, our attorneys stand ready to protect your rights and interests. Contact us today with any questions about your legal case. From our office in Miami, our office in West Palm Beach, and our office in Wellington, we handle shareholder litigation throughout South Florida, including in Martin County, Palm Beach County, Miami-Dade County, and Broward County.