Wells Fargo faces shareholder lawsuit alleging breaches of compliance
NEW YORK, Sept. 30 (Reuters) – A federal judge on Thursday rejected Wells Fargo & Co’s (WFC.N) offer to dismiss a lawsuit accusing America’s fourth bank of defrauding shareholders over its compliance consent orders from US regulators governing its conduct.
US District Judge Gregory Woods in Manhattan said the plaintiff shareholders plausibly alleged that certain statements by various bank officials, including former chief executive Tim Sloan, were “willfully or recklessly false or misleading.”
Woods has dismissed claims against Sloan’s successor Charles Scharf, saying he was not guilty of spreading the statements.
Wells Fargo and lawyers for the defendants did not immediately respond to requests for comment. Lawyers for the shareholders did not immediately respond to similar requests.
The San Francisco-based bank has been subject since 2018 to consent orders from the Federal Reserve and two other regulators to improve governance and oversight.
The orders followed a string of scandals that began in 2016 that highlighted Wells Fargo’s mistreatment of customers, including opening millions of unauthorized accounts and billing borrowers for insurance including they didn’t need.
The Fed capped Wells Fargo’s assets at $ 1.95 trillion until the bank improves its governance and risk controls.
Wells Fargo has paid more than $ 5 billion in fines since the scandals began.
Reporting by Jonathan Stempel in New York; edited by Jonathan Oatis and Aurora Ellis
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