Wells Fargo to Pay $1B to Shareholders Over Scam Accounts

What happened 

Wells Fargo has agreed to a preliminary settlement for a lawsuit filed by a group of shareholders that has been in litigation for three years. The plaintiffs claim the bank inaccurately portrayed its progress in recovering from a recent series of scandals involving customers, including opening fraudulent accounts. This claim was substantiated by a report from the House Financial Services Committee that concluded Wells Fargo wasn't in compliance with the consent orders, which caused the bank's stock to plunge 34%.

Wells Fargo continues to deny the allegations, but chose to settle the suit to avoid the costs and other burdens associated with litigation.

"This agreement resolves a consolidated securities class-action lawsuit involving the company and several former executives and a director, who have not been with the company for several years," said Wells Fargo in a statement. "While we disagree with the allegations in this case, we are pleased to have resolved this matter."

So what 

The plaintiffs in this case included two large state pension programs, including the Employees' Retirement System of Rhode Island (ERSRI) and the Public Employees' Retirement System of Mississippi.

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According to Steven J. Toll, Managing Partner at Cohen Milstein Sellers & Toll, "If approved, this settlement will help compensate hundreds of thousands of investors -- state employees, nurses, teachers, police, firefighters, and others -- whose critical retirement savings were impacted by Wells Fargo's fraudulent business practices."

Now what 

There are currently no details on when or how affected individuals will be reimbursed, as the preliminary settlement still awaits judicial approval. 

This settlement is specific to the case brought by investors, and is separate from the action taken earlier this year by the Consumer Financial Protection Bureau (CFPB) against Wells Fargo for breaking federal consumer protection laws around auto loans, mortgages, and bank accounts. That action resulted in a fine of around $3.7 billion, $2 billion of which is required to pay back customers, and another $1.7 billion to be put into a victims' relief fund.

You should be notified by Wells Fargo if you are eligible for reimbursement.

The CFPB warns consumers to be wary of scams surrounding these settlements. Don't trust anyone claiming they can get your compensation, especially if they ask you to pay any money upfront. If you're contacted by a suspected scammer, report it to the CFPB as soon as possible.