A federal judge in San Francisco has given final approval to a $480-million deal that settles a shareholder class-action suit against Wells Fargo over the bank’s unauthorized accounts scandal.
The deal, reached in May and given preliminary approval in September, would compensate Wells Fargo shareholders for losses they incurred after the bank’s 2016 admission that employees might have created millions of unauthorized accounts.
The settlement will pay shareholders who bought Wells Fargo stock between Feb. 26, 2014, and Sept. 20, 2016. During that period, Wells Fargo shares traded for as much as $53, but later sank as low as $41.
The San Francisco finance giant will pay $480 million, nearly $96 million of which in fees and expenses will go to the attorneys who worked on the case. If all eligible shareholders participate in the settlement, the payout would amount to 35 cents per share.
Shareholders, including lead plaintiff Union Asset Management, sued for securities fraud in 2016, alleging that Wells Fargo executives had improperly inflated the company’s stock price by touting the bank’s prowess at so-called cross-selling — getting customers to sign up for numerous accounts and services.
The bank’s focus on cross-selling was later blamed for the aggressive sales quotas that pushed thousands of workers to open accounts without customers’ authorization. Shareholders argued that executives continued to brag about cross-selling even once it was clear those quotas were “corrupting, rather than reinforcing, Wells Fargo’s purported corporate values and cross-selling business model,” according to court filings.
In a statement Wednesday announcing the settlement’s final approval, the bank said it was pleased to have the case resolved and noted that it is has not admitted wrongdoing.
“The company has denied the claims and allegations in the action and entered into the settlement agreement to avoid the cost and disruption of further litigation,” according to the statement.
Investors who believe they are eligible for the settlement have until Jan. 23 to file claims at www.wellsfargosecuritieslitigation.com or by calling (855) 349-6457.
This is the second major class-action settlement for the bank in the wake of the accounts scandal. In May, another federal judge signed off on a $142-million settlement for bank customers who paid improper fees or had their credit scores dinged by the bank’s practices.