More trouble for Wells Fargo

by Ryan Smith07 Sep 2017
A Brussels-based investment company has filed a class-action lawsuit against Wells Fargo, accusing the scandal-plagued bank of illegally using money from a residential mortgage-backed securities trust fund to fund its defense in court cases.

Royal Park Investments filed the lawsuit in federal court Friday, accusing the bank of using trust funds to pay for legal fees, according to a Reuters report. And Royal Park isn’t the first to pursue the bank over the issue.

Last month, several Pimco investment funds accused Wells Fargo of misusing mortgage-bond trust money to pay its own legal expenses – in order to defend against allegations that it was breaching its duties as an mortgage-bond trustee, Reuters reported.

The Pimco funds filed a complaint in Manhattan State Supreme Court, asking for a declaratory judgment that the banking giant is not allowed to use mortgage-bond trust money to pay for its defense against claims that it’s breaching its duty as a trustee.

The scandal-plagued bank has also been slapped with lawsuits from former employees.  Reza Razzaghipour and Marla Razzaghipour, a husband and wife who are both former Wells Fargo managers, have sued the bank for allegedly firing them when they raised concerns about its sales practices.

The Razzaghipours claim they were sacked in retaliation for raising concerns over questionable sales practices – including falsification of bank records, according to a MarketWatch report. Wells Fargo has already been ordered to pay $185 million in fines after revelations that its sales employees opened up to 3.5 million fake customer accounts.

However, Wells Fargo denies that the Razzaghipours were fired in retaliation.

“The company terminated the employment of these two individuals for legitimate and lawful reasons,” a Wells Fargo spokesman said in a statement.


Related stories:
New revelations could endanger Wells Fargo’s $142 million settlement
Wells Fargo’s fake-account scandal may be much bigger than originally thought
 

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