Wells Fargo & Co. has agreed to pay $1 billion to shareholders as part of a class-action lawsuit related to the bank's 2016 unauthorized accounts scandal. The settlement, which still requires approval over the next few months, will conclude a lawsuit involving both the company and several former executives and directors who have not been associated with Wells Fargo for multiple years.
In 2020, Wells Fargo agreed to settle U.S. investigations into more than a decade of widespread consumer abuses when it was discovered that employees may have opened millions of fake accounts in order to meet sales goals. Shareholders claimed that the bank and its past leadership were slower in addressing regulatory issues than they acknowledged publicly.
The $1 billion settlement is one in a series of large settlements as Wells Fargo continues managing fallout from the scheme nearly ten years after its discovery. Proceeds from this settlement will be distributed among investors who purchased Wells Fargo stock between February 2, 2018, through March 12, 2020. A federal judge in New York must first approve the proposed sum before distribution can occur.
A preliminary settlement was outlined in a court filing on Monday night and is expected to be approved within the coming months, according to The Wall Street Journal.
"We are pleased with this development as it represents another significant step toward resolving our legacy issues," said Mark Folkswagenheim, spokesperson for Wells Fargo. "We remain focused on rebuilding trust with our customers while continuing efforts towards maintaining responsible business practices."
Investors welcomed news of the agreement cautiously but positively overall; many hope that this marks an important milestone for regaining confidence amongst stakeholders following such high-profile scandals surrounding Well's largest lender.
"The sizeable amount should send a clear message about corporate accountability," commented financial analyst Diana Thompson-Briscoe when asked about her thoughts on potential implications resulting from this settlement. "It's a step in the right direction for Wells Fargo, and I hope other institutions will take note."
As Wells Fargo moves forward from this settlement, it is expected that the bank will continue to prioritize rebuilding trust with customers and shareholders alike while focusing on improved corporate governance measures in order to prevent similar issues from arising in the future.