Wells Fargo to pay $480m over fake-accounts scandal

A judge has approved a settlement between the embattled bank and shareholders

Wells Fargo to pay $480m over fake-accounts scandal

A federal judge has approved a $480 million settlement in a class-action lawsuit against Wells Fargo.

The lawsuit was filed by shareholders and concerned the banking giant’s fake-accounts scandal, in which Wells Fargo sales employees opened millions of unauthorized customer accounts. The settlement will pay shareholders who bought Wells Fargo stock between Feb. 26, 2014 and Sept. 20, 2016, according to a report by SFGate. During that time, Wells Fargo shares traded for up to $53. In the wake of the scandal, however, the bank’s shares sank as low as $41.

Nearly $96 million of the $480 million settlement will go to attorneys, according to SFGate. If all eligible shareholders participate in the settlement, they would receive a payout amounting to 35 cents per share.

Shareholders sued the bank for securities fraud in 2016, claiming that Wells Fargo’s executives had artificially inflated the bank’s stock price by bragging about its talent for cross-selling, SFGate reported. However, the bank’s aggressive focus on cross-selling led to unreasonable sales quotas that pushed salespeople to open accounts without customers’ knowledge or consent.

In a statement on the settlement, Wells Fargo said it was pleased the case was resolved but did not admit wrongdoing.

“The company has denied the claims and allegations in the action and entered into the settlement t avoid the cost and disruption of further litigation,” Wells Fargo said in the statement.

This is the second major class-action settlement in the wake of the fake-accounts debacle, SFGate reported. In May, a judge approved a $142 million for Wells Fargo customers who paid improper fees.