Wells Fargo to Pay $300 mn in Securities Lawsuit Settlement
A class action lawsuit alleging fraud was brought forward by the Construction Laborers Pension Trust for Southern California on behalf of hundreds of investors. Former Wells Fargo CEO Timothy Sloan was included in the settlement. The trial began on February 27th, and the settlement states that $300 million, representing 31%-47% of the projected aggregate losses, is a “fantastic performance” for the subclass and falls beyond the average range of percentages recovered. It will likely be among the top 100 financial fraud class action settlements. Although Wells Fargo disputed the claims, they agreed to settle the issue. The settlement, which alleges breaches of Federal Securities Law, has to be approved by the court on March 22nd. Within ten days after settlement approval, the funds will be put into escrow.
Essential Details and Information
The plaintiffs alleged that Wells Fargo fraudulently injured them when they purchased or acquired Wells Fargo common stock between November 3, 2016 and August 3, 2017. According to the settlement, the bank made materially misleading or false statements which caused the share price of Wells Fargo to increase from $46 in late October 2016 to more than $58 at its peak before ending the period at $51. Furthermore, the lawsuit stated that Wells Fargo “improperly and forcibly imposed unwanted collateral protective insurance on a significant number of its clients and neglected to repay unearned guaranteed car protection premium to a large number of consumers.
The New York Insurance Department defines force-placed insurance as a policy imposed by a creditor, bank, or loan provider when the property owner’s insurance is canceled, expired, or inadequate and the borrower does not renew it. 25,000 Wells Fargo clients allegedly had their cars repossessed. According to Financial Web, collateral-protection insurance shields car-loan lenders from monetary losses from paying claims when vehicle owners don’t have auto insurance. CPI lets lenders fund claims without loss. The primary plaintiff has alleged that Wells Fargo “knew of these risks, but never reported these to shareholders or the public,” and has brought a lawsuit claiming fraud. The allegation is that the bank integrated the insurance fee into the loans without the clients being aware.
In July 2017, the New York Times uncovered the allegations of fraud that had been put forward by the lead plaintiff in the lawsuit. The plaintiff alleged that shareholders in Wells Fargo had suffered economic losses due to two disclosures that exposed the company’s issues to investors.
To keep up with the latest developments in the world of fintech and for more fintech news, please visit https://worldfintechnews.com/.