For the growing number of customers looking to sue over Wells Fargo’s unauthorized account scandal, the company is hoping to resolve any disputes in arbitration outside of court.
The lender has requested that the federal lawsuits filed by 80 customers in Salt Lake City be thrown out, Bloomberg reported. The bank is being sued for millions plus punitive damages.
In a similar class-action lawsuit in Northern California, Wells Fargo confirmed a judge ruled that arbitration agreements can be enforced.
According to Bloomberg, three customers in Utah filed lawsuits in September before the bank paid $185 million to settle claims that employees opened nearly 1,534,280 unauthorized deposit accounts, which accrued a total of $2 million in fees. The plaintiffs in Utah are pursuing a class-action suit to recover at least $5 million in damages.
Over five years, the bank fired 5,300 workers, and just last month, Chief Executive John Stumpf announced his resignation as chairman and CEO of Well Fargo in the wake of the scandal. Stumpf’s role is filled for the time being by President and Chief Operating Officer Timothy J. Sloan, who was widely seen as his heir apparent. According to an estimate by Mark Reilly, a managing director at human resources consultancy Overture Group LLC, Stumpf will walk away with total compensation during his years at Wells Fargo valued at about $120 million.
According to a statement released last week by the Office of the Comptroller of Currency (OCC), the firm’s banking unit will need to seek approval before making a wide range of business decisions and will be subject to some additional oversight.
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From now on, the bank cannot offer departing executives “golden parachute” payments, and it must seek OCC permission before changing its business plans, hiring or firing senior executives or revamping its board of directors. The move comes as a wholesale unilateral alteration of the terms of the September agreement negotiated with Wells Fargo.
“I’ve never seen anything like this,” said a former OCC official who asked not to be identified. “It’s surprising to see the agency reverse themselves on a negotiated agreement without some new information coming to light.”
