Wells Fargo Prevails in Shareholder Lawsuit Over Alleged “Fake” Interviews
According to a report from Reuters, Wells Fargo—the American multinational financial services company based in San Francisco, California—has prevailed against a lawsuit filed by a group of shareholders. The claim had alleged that the company used “sham” interviews to boost certain diversity statistics. Within this article, our West Palm Beach shareholder litigation attorney explains what we know about the case.
Allegations: Wells Fargo Used Fake Interviews To Boost Diversity Stats and Stock Price
Wells Fargo—the fourth largest bank in the United States—was sued by shareholders on the grounds that it inflated its stock price with a false “diversity” campaign. More specifically, the plaintiffs in the shareholder dispute argued that Wells Fargo artificially boosted its stock price with nine statements about its “diverse slates” policy. The policy, which was introduced by the company back in 2020, mandated that at least 50 percent of candidates for jobs with a salary of $100,000 or more belong to minority or disadvantaged groups. However, the shareholders argued that the interviews were effectively “shams.”
Wells Fargo Share Price Dropped Sharply After a Negative Report
The shareholder lawsuit filed in this case came after a June 2022 report in The New York Times that stated that federal regulators probed Wells Fargo over potential sham diversity interviews. That report had an immediate, negative impact on the company’s stock price. Over the course of just a few days following the report, the share price in Wells Fargo dropped by more than ten percent. The lawsuit was filed on the grounds that top corporate executives—including the Chief Executive Officer (CEO)—were aware that the diversity interviews were effectively fake. Shareholders argue that the stock price was inflated based on this fact and that the company’s leaders should be held liable for the drop in shareholder value.
Shareholder Lawsuit Dismissed: No Sufficient Evidence of Widespread Fake Interviews
After review in a federal court in California, a judge has ruled in favor of Wells Fargo. Judge Trina Thompson in San Francisco ruled on Friday that shareholders did not provide evidence that such deceitful interviews were prevalent or even occurred. Beyond that, Judge Thompson stated there was no evidence indicating that CEO Charlie Scharf and two senior diversity officials were aware or should have been alerted of the alleged sham interviews. Indeed, the court determined that shareholders failed to provide adequate evidence that sham diversity interviews were a widespread practice in the company or that they even occurred at all. For their part, neither Wells Fargo nor their legal counsel provided any public comment on the federal court’s decision.
Get Legal Help With a Shareholder Litigation Attorney in South Florida
At Pike & Lustig, LLP, we are adept in handling complex shareholder disputes. If you have any questions about shareholder litigation, our attorneys are available to help. Contact us today to set up a confidential consultation. From an office in West Palm Beach and an office in Miami, our firm handles shareholder litigation throughout Southeastern Florida, including in Miami-Dade County, Palm Beach County, and Broward County.