Wells Fargo has settled a class action suit surrounding compliance issues in the aftermath of its 2016 fake accounts scandal, agreeing to pay $1 billion to the plaintiffs.
Shareholders had alleged the bank and its former leaders were dishonest in communicating how quickly they were fixing the systems meant to prevent it from opening phony accounts. The plaintiffs accused the company of moving slower than it had suggested publicly.
The settlement must still be approved by the court.
The class action suit focused on a period between 2018 and 2020. Plaintiffs allege the bank led investors to believe it was working faster than it actually was to fix the problems. A series of internal communications released in 2020 suggested leaders at the bank knew they were failing to comply with regulators orders, however. Shareholders sued later that year.
Wells Fargo, in a statement to Fortune, said This agreement resolves a consolidated securities class action lawsuit involving the company and several former executives and a director, who have not been with the company for several years. While we disagree with the allegations in this case, we are pleased to have resolved this matter.
The Rhode Island pension fund was co-lead plaintiff in the case, along with a pension fund in Mississippi and Swedish bank Handelsbanken Fonder AB.
Wells Fargo betrayed the trust of Rhode Island pensioners and is now rightly facing consequences because of that, said Rhode Island General Treasurer James A. Diossa in a statement. I am proud that [the Employees Retirement System of Rhode Island] stood up for its stakeholders and held Wells Fargo accountable for its misconduct.
The settlement comes roughly two months after an executive implicated in the scandal pleaded guilty to obstructing regulators investigation into abusive sales practices. Carrie Tolstedt was sentenced to serve a 16-month prison sentence and pay a $17 million fine. She is also banned from working in the banking industry ever again.
