Wells Fargo & Co. (“Wells Fargo” or the “Company”) came under fire for a scandal involving its employees creating accounts for customers without their knowledge to meet standards that were being set by the Company. As a response to the scandal, Wells Fargo has paid a settlement of $185 million in restitution to the customers affected by the fake accounts and unfair charges. It also fired 5,300 employees over the last few years in an attempt to end any unethical behavior.
Recently, shareholders of Wells Fargo filed the first securities class action lawsuit connected to the scandal. According to the lawsuit, the Company violated the Securities Exchange Act of 1934 by creating millions of fake accounts, which resulted in artificially inflated stock prices. When the truth was revealed, the Company’s stock dove 9 percent, harming investors. The investors claim they would not have made the investments to Wells Fargo if they had known the truth about the Company’s activities. The class is defined as anyone who invested in Wells Fargo from February 24, 2014 until September 15, 2016. The lawsuit also specifically named Chairman and CEO, John G. Stumpf, Chief Financial Officer, John R. Shrewsberry, and former head of community banking Carrie L. Tolstedt as defendants, all of whom allegedly made millions off the scandal.
Wells Fargo investors are seeking to recover damages, attorneys’ fees, and other injunctive relief, including a constructive trust and equity grants that would be calculated from Wells Fargo employees’ performance-based compensation and the compensation the individually named defendants earned as a result of the scandal.
The legal team at SFMS has significant experience litigating securities matters. If you have any questions regarding this subject or this posting, please contact Nick Lussier ([email protected]) or Chiharu Sekino ([email protected]). We can also be reached toll-free at (866) 540-5505.
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Daniels, Melissa. “Wells Fargo Hit With Securities Suit Over Fake Accounts.” Law360. Portfolio Media, Inc. 26 Sept. 2016. Web.