Banking

Wells Fargo Reaches $240M Settlement For Fake Accounts

Wells Fargo

Wells Fargo has reached a $240 million settlement with U.S. shareholders over the scandal involving its bank employees opening up millions of unauthorized customer accounts.

According to Reuters, the settlement by the bank's executives and directors was filed on Thursday (Feb. 28) with the federal court in San Francisco. Insurers for 20 current and former Wells Fargo executives and directors, including Chief Executive Tim Sloan and his predecessor John Stumpf, will be responsible for paying the $240 million to the bank. The officials denied any wrongdoing.

The shareholders in the settlement were led by pension plans in Alabama and Colorado, with their lawyers noting that this is largest insurer-funded cash settlement in a U.S. shareholder derivative lawsuit. However, it still needs a judge’s approval.

Back in 2016, Wells Fargo was the subject of a huge scandal in which employees had opened 3.5 million fake accounts in the retail banking units. That resulted in a record fine, the ousting of key executives — including the CEO — and an overhaul of corporate culture at the company. The scandal also hurt Wells Fargo’s stock price and reputation.

Last May, the bank reached a $480 million settlement related to a securities fraud lawsuit brought on by shareholders over the accounts. And that was just one of the scandals that Wells Fargo has been hit with in the last few years. Last August it reached a $2.09 billion settlement with the U.S. Department of Justice over claims related to mortgage loans that the lender processed before the last recession. In addition, the company is currently trying to avoid compensating all of the 600,000 drivers affected by its auto loan scandal.

Just this past week, the company revealed that it might have to pay up to an additional $2.7 billion to resolve legal matters, an increase from the $2.2 billion it had set aside for such expenses three months earlier.

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