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Wells Fargo Will Pay $480M to Resolve Fake-Accounts Lawsuit

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May 7, 2018 by Hannah Levitt

Wells Fargo & Co. agreed to pay $480 million to settle a class-action lawsuit in which investors accused the bank of securities fraud related to its fake-account scandal.

The settlement resolves the main class-action suit brought by shareholders targeting the bank’s allegedly deficient disclosures related to its sales practices. It had previously set aside reserves for the settlement, according to a regulatory filing Friday. Wells Fargo said in a statement that it denies the allegations in the suit.

“Moving to put this case behind us is in the best interest of our team members, customers, investors and other stakeholders,” Chief Executive Officer Tim Sloan said in the statement.

This is the latest cost for Wells Fargo from a consumer banking scandal that arose in September 2016. That issue, in which employees opened as many as 3.5 million bogus accounts, ultimately cost then-CEO John Stumpf his job. The bank still faces a bevy of other lawsuits on related matters.

Last month, the San Francisco-based bank settled with the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau for an unprecedented $1 billion to cover issues in auto lending and mortgages. In February, the Federal Reserve imposed a sanction prohibiting the bank from boosting total assets beyond their level at the end of 2017 until it fixes shortcomings.

The lender said in a filing Friday that “reasonably possible” legal charges could be as high as $2.6 billion beyond reserves as of March 31. This is down from $2.7 billion in the previous quarter.

Wells Fargo executives are set to update analysts and shareholders on financial targets and regulatory matters at an investor day scheduled for May 10.

The shareholder case is Hefler v. Wells Fargo & Co., 3:16-cv-05479, U.S. District Court, Northern District of California (San Francisco).

Copyright 2026 Bloomberg.
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