Wells Fargo’s current and former executives and directors have to face most of the lawsuits lodged against the company and its executives by shareholders who want to hold them personally responsible for the fake accounts scandal.
According to a news report in Reuters citing U.S. District Judge Jon Tigar, the federal judge said shareholders are allowed to pursue claims that Wells Fargo executives ignored the fact that employees were under such pressure to meet sales targets that it led to the fake account openings. They also contend the executives misled the public about the practices that were underway.
“Where, as here, plaintiffs’ claims arise from a pervasive and undisputed fraud going to the core of the company’s business, it is reasonable to infer senior executives knew about, or at least recklessly turned a blind eye to, the stream of red flags,” Tigar wrote in a decision, reported Reuters. What’s more, the judge said it wasn’t likely that the Wells Fargo CEO Tim Sloan didn’t know about the practice before 2013, when he was CFO of the company. The judge wrote that he was “certainly aware of these issues” back in December of 2013, when he was quoted in a Los Angeles Times story as saying: “I‘m not aware of any overbearing sales culture.”
Reuters reported the shareholder lawsuit is aiming to force officers and directors of the company to reimburse them for losses that were a direct result of their lack of oversight and misleading statements about the account scandal. Ever since the fall of last year, Wells Fargo has been reeling from the fake account scandal, in which as high as 3.5 million accounts were opened without customers’ approval, which has resulted in a fine from the Consumer Financial Protection Bureau.